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Leonardo A. Rocha, Maria Ester S. Dal Poz, Patrícia V.P.S. Lima, Ahmad S. Khan and Napiê G. A. Silva
''Corruption, bureaucracy and other institutional failures: the “cancer” of innovation and development''
( 2019, Vol. 39 No.3 )
This study analyzes the impact of corruption on the elasticity of R&D investments in sales per worker by firms. In this sense, it built a model of Schumpeterian growth using optimal control theory relating the effects of corruption on demand for R&D. The model results show that corruption negatively affects the R&D demand and long-term rate of technical progress. However, this cost attributes different 'weights' as firms approach the technological frontier. To empirically test this relationship, it was built partial order- frontiers on a sample of 2,000 firms from 40 sectors and 46 countries. Interacting efficiency scores with the corruption index, the less-efficient firms are disadvantaged with corruption in relation to the frontier firms. This pattern is observed in the coefficient of elasticity of R&D investments indicating that corruption leads to different costs, 'favoring' the most efficient firms in relation to the most backward firms.
Keywords: Corruption, Innovation, Development
JEL: O2 - Development Planning and Policy: General
O3 - Technological Change; Research and Development: General
Manuscript Received : May 17 2019 Manuscript Accepted : Jul 12 2019

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