The effect of corruption on the manufacturing sector in India

Atsushi Kato*, Takahiro Sato

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)


This article investigates the effects of corruption on the performance of the manufacturing sector at the state level in India. We employ conviction rates of corruption-related cases as an instrument for the extent of corruption, address the underreporting problem, and examine the impact of corruption on the gross value added per worker, total factor productivity, and capital-labor ratio of three-digit manufacturing industries in each state. Our estimation results show that corruption reduces gross value added per worker and total factor productivity. Furthermore, we show that the adverse effects of corruption are more salient in industries with smaller average firm size.

Original languageEnglish
Pages (from-to)155-178
Number of pages24
JournalEconomics of Governance
Issue number2
Publication statusPublished - 2014 May
Externally publishedYes


  • Corruption
  • Gross value added
  • Scale economies
  • Total factor productivity

ASJC Scopus subject areas

  • Business and International Management
  • Economics, Econometrics and Finance(all)


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