Abstract
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 language | English |
|---|---|
| Pages (from-to) | 155-178 |
| Number of pages | 24 |
| Journal | Economics of Governance |
| Volume | 15 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 2014 Jan 1 |
| Externally published | Yes |
Keywords
- 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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Cite this
Kato, A., & Sato, T. (2014). The effect of corruption on the manufacturing sector in India. Economics of Governance, 15(2), 155-178. https://doi.org/10.1007/s10101-014-0140-y