PDF, GB, 139 p., 796 Ko - Femise

The main goal of the project was to analyze the causes of corruption and ways of
improvement. Several hypotheses were tested here. Some of them appear quite general,
e.g. that (i) corruption is lower in higher economically developed countries and that (ii)
stable democratic institutions and corruption are expected to be positively correlated.
Two other hypotheses were more important for practical reasons for MPCs; i.e. that (iii)
corruption is associated with the number of bureaucratic procedures and (iv) that it rises
with bureaucratic delays.
The testing started with the two exogenous variables explaining corruption: the
logarithm of GDP per capita and the level of democracy proxied by the political rights
variable. This pair of control variables proved to have correct positive sign and be
statistically significant. Hence, the first two hypotheses have been positively verified.
Then, we dealt with licenses variables. This topic tracks the procedures, time, and costs
to build a warehouse, including obtaining necessary licenses and permits, completing
required notifications and inspections, and obtaining utility connections. As expected, it
came out in the investigation that longer bureaucratic delays and higher number of
procedures were a significant factor in the prevalence of corruption.
On the other hand, official costs of dealing with licenses came out significant only in
some of the specifications, with low levels of confidence. The positive signs in all
specifications indicate that official costs of bureaucratic procedures do not play a major
role in corruption, since businesses prefer predictable official payments to unpredictable
informal ones so they substitute one by the other. This means that official incentive
payments may be one way to achieve a less corrupt and speedier bureaucracy.
To accomplish a successful reduction in the level of corruption, liberalization and
improvements in working of the bureaucracy will be required in most MPCs.
Decreasing the number of procedures, streamlining of the bureaucracy and other ways
to limit time spent waiting for its decisions may significantly reduce corruption, even if
it occurs at a higher official cost of conducting administrative procedures. Given the
long history of corruption in the region, the proposed regulatory measures would
probably not be sufficient to eradicate it to the level of new members of the European
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