Randomised anti-corruption audits in Brazil yield positive economic outcomes for local firms and businesses
Read “Corruption and Firms” by Emanuele Colonnelli and Mounu Prem here.
The causal relationship between corruption and firm growth has been hard to establish, despite being of crucial policy importance. In this VoxDevTalk, Emanuele Colonnelli discusses his recent work with Mounu Prem analysing the impact of an anti-corruption programme in Brazil. They found that randomised anti-corruption audits of municipal governments led to positive effects for local firms by increasing sales, improving access to credit, and encouraging new entrants into the market. The greatest impact was in the sectors most dependent on government, such as construction. The overall increase in economic activity drove market entrance, survival and growth, and this was not limited to audited municipalities. The randomised implementation of the programme also yielded spillover effects by deterring corrupt practices in other municipalities.