Firm-level aggregate corruption and competition: The role of telecommunications infrastructure(sic)(sic)(sic)Palabras Clave

This study examines the relationship between competition and corruption in the presence of enhanced telecommunications infrastructure. We use firm-level aggregate data provided by the World Bank Enterprise Surveys and collected between 2006 and 2018. Our fixed-effects results are two-fold. First, the number of competing firms increases corruption in developing countries. This result is consistent with the previous literature on the competition-corruption nexus. Second, corruption decreases as the number of competing firms increases in countries with better information and communication technology endowment. Our results are robust to controlling for endogeneity via the two-step, feasible efficient generalized method of moments and suggest that e-governance may help to reduce firm-level corruption in a competitive environment. Given the negative impact of corruption on investment and growth, developing countries should aim at adopting and using more telecommunications infrastructure, along with the traditional approaches of combatting corruption that are based on enforcing rules of law or building stronger institutions, just to name a few, to boost investment and economic growth.