Are new states more corrupt? Expert opinions versus firms’ experiences

ABSTRACT

We find that new states are perceived to be more corrupt even though businesses do not report more bribery in newer states. This is suggestive of an unearned, and likely high, reputational cost to being a new state. These findings hold over a number of specifications that include additional economic, historical and geographic controls.

KEYWORDS:

• Corruption
• corruption perceptions
• bribery
• state age

JEL CLASSIFICATION:

• D70
• D73

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Our chosen definition of corruption is the abuse of public power for private gain.

² We acknowledge that the moral connotation of bribery may not be helpful in social contexts where informal payment is seen as a normal and legitimate practice. See Ledeneva (2018).

³ The newest states that take a value of ‘3’ for which we have data include Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Croatia, Czech Republic, Eritrea, Estonia, Georgia, Kazakhstan, Latvia, Lithuania, Moldova, Namibia, Slovakia, Slovenia, Tajikistan, Ukraine and Uzbekistan.