Business corruption: Incidents, mechanisms and consequences

This PhD project explores corruption in international trade and foreign direct investment. Tina Søreide is a PhD student at the Norwegian School of Economics and Business Administration (NHH). Supervisor is Kjetil Bjorvatn. The project consists of four parts: 1. Corruption and privatization. Corruption may affect post-privatization market structure and thereby the welfare outcome of privatization. The analysis decribes why this kind of market reform will result in a higher degree of market concentration in countries where corruption is a common problem, and why a competition in bribes is inefficient in such settings. A perhaps more surprising result is that a stronger propensity to embezzle state revenues, may reduce government officials' benefits from corruption. Kjetil Bjorvatn is co-author. The paper is forthcomming in the European Journal of Political Economy. 2. Beaten by bribery: Exit, voice or loyalty. This is a study of firms'choices when entering a market where the business climate appears to be more challenging than expected prior to entry. Generally, a firm has three options: Leave the market, speak out about the problem, or adopt to local practices. To be completed in 2005. 3. Corruption in international business transactions: A survey among Norwegian firms. Firms headquartering in Norway are surveyed about their experiences with corruption in international business transactions. The study is conducted in collaboration with NHO, the Norwegian Confederation of Business and Industry. The report is available on this homepage. A paper about the study is forthcomming in Susan Rose-Ackerman (ed.) "Handbook of Economic Corruption", in 2006. 4. Firms' propensity to bribe: The importance of risk and competitive pressure. Under progress. Completion of the PhD project is expected in January 2006.