Greasing the Wheels? The Effect of Corruption in Regulated Manufacturing Sectors of India
We investigate whether corruption "greases the wheels" of bureaucracies and enhances economic performance. Specifically, we examine the interaction effect of corruption and regulation on the economic performance of manufacturing industries in India. Our estimation results show that the combination of corruption and regulation has significant positive effects on gross value added per worker, total factor productivity, and capital labor ratio. This indicates the existence of a "greasing the wheels" effect.
Corruption, Regulation, Gross value added per worker, TFP
D73, K42, L52, K23
Research Institute for Economics and Business Administration,
Rokkodai-cho, Nada-ku, Kobe
School of Business, Aoyama Gakuin University