Does the Evidence on Corruption Depend on How it is Measured? Results from a Cross Country Study on Micro Data Sets

This paper provides micro econometric evidence on the factors that influence an individual’s or a firm’s vulnerability to receiving bribe demands. While much of the existing literature on corruption looks at the effect of corruption on macro variables such as growth rates and income distribution, this study provides a departure by focussing on victims of corruption by attempting to profile an individual or firm that is particularly vulnerable to bribe demands. This is done using micro data at the level of individuals and business units from, respectively, the International Crime Victim Surveys (ICVS) and the World Bank Enterprise Surveys (WBES). These data sets are supplemented by country level information from a variety of sources. The study finds that the proportion of individuals facing corruption is consistently lower than that of firms in business transactions, with the gap between the two forms of corruption closing only for high income countries. A comparison of individual and business corruption reveals some interesting similarities and differences between the determinants of the two forms of bribe victimisation. The strengthening of trust, whether via improved literacy and development of social networks or via a strong legal system, and an effective and transparent regulatory mechanism is the key to combating both forms of corruption