How Petty is Petty Corruption? Evidence from Firm Surveys in Africa

SummaryEvidence suggests that corruption is costly for African firms. This paper, however, shows that a minor difference in the way the question on bribe payments is asked has a large effect on estimates of the size of the burden. On average, firms report payments that are between 4 and 15 times higher when they report them as a percent of sales than when they report them in monetary terms. The paper discusses several possible reasons for this, but none explain the difference. One plausible remaining reason is that firm managers overestimate bribes when they report them in percentage terms.