Corruption and the shadow economy at the
regional level
Gillanders, RobertORCID: 0000-0001-9462-0005 and Parviainen, SinikkaORCID: 0000-0002-4915-2799
(2018)
Corruption and the shadow economy at the
regional level.
Review of Development Economics, 22
(4).
pp. 1729-1743.
ISSN 1363-6669
The links between corruption and the shadow economy have mostly been studied
empirically at the country level. This paper contributes to this literature by examining
the relationship at the sub-national level. We also add value to the existing literature in
that we employ data capturing the extent to which the shadow economy and corruption
are viewed as problems by firms as opposed to the standard measures of corruption and
the size of the shadow economy. Using World Bank Enterprise Survey data, we find
that sub-national units in which more firms report that corruption is an obstacle to
their operations also tend to have more firms that report that the practices of informal
competitors are an obstacle and vice versa. Sub-Saharan Africa is different in that
neither of these findings are evident in that sub-sample.