Bribery and its Firm-Level Outcomes in Africa and Latin America

Does paying bribes buy influence rents? While a lot is known about the antecedents and consequences of legal influence strategies, we know little about the drivers and consequences of illegal influence strategies (bribery) on firms. By using a unique database that measures firm level bribery in Africa and Latin America, we find that private and domestic firms pay a relatively high proportion of their revenues as an inducement to corrupt officials. Our results also show that paying bribes is not just a tax, but a strategic choice of firms that decide to pursue this channel instead of others to obtain some resources that they need. In particular, we find that paying bribes increases the odds of accessing government resources, but deters firm investments in fixed assets.