Does corruption discourage entrepreneurship?

Arbeitspapier

Although entrepreneurship plays a key role in economic development, it remains largely unknown. The reason is that it is challenging to measure entrepreneurship objectively and identify its determinants. In this paper, we analyze the effect of a particular feature of the institutional landscape, namely corruption, on entrepreneurship. It is expected that corruption discourages entrepreneurship since it undermines fair competition. We employ two proxies for entrepreneurship that are widely used in the literature: (i) nascent entrepreneurship collected from Global Entrepreneurship Monitor; and (ii) entry rate defined as the number of new firms divided by the total number of previous year's registered businesses, collected from the World Bank Group Entrepreneurship Survey. We find that better control of corruption promotes entrepreneurship. Our findings are preserved when we add other determinants of entrepreneurship which are drawn from the literature. When we use legal origins as instruments for corruption, our results remain essentially the same.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ADB Economics Working Paper Series ; No. 670

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Empirical Analysis ; General Equilibrium and Disequilibrium: Financial Markets ; Bureaucracy; Administrative Processes in Public Organizations; Corruption ; Institutions and the Macroeconomy ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General ; Corporate Finance and Governance: Government Policy and Regulation
• Subject: entrepreneurship ; corruption ; institution ; corporate tax ; legal origin

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Park, Donghyun ; Shin, Kwanho
• Event: Veröffentlichung
• (who): Asian Development Bank (ADB)
• (where): Manila
• (when): 2022

Further information

• DOI: doi:10.22617/WPS220372-2
• Handle: http://hdl.handle.net/10419/272778
• Last update: 10.03.2025, 11:45 AM CET