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Economics and Finance in Indonesia
Bribery; greasing-the-wheels hypothesis; firm performance; democracy; decentralization
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Full-Text Articles in Social and Behavioral Sciences
Should I Bribe? Re-Examining The Greasing-The-Wheels Hypothesis In Democratic Post-Soeharto Indonesia, Irfan Kurniawan
Should I Bribe? Re-Examining The Greasing-The-Wheels Hypothesis In Democratic Post-Soeharto Indonesia, Irfan Kurniawan
Economics and Finance in Indonesia
During the Soeharto Era corruption was considered to grease the wheels of growth in Indonesia, a country once considered to be the most corrupt country in the world. Indonesia began to experience instantaneous decentralization and democratization after the Soeharto Era abruptly ended. While vastly celebrated, these episodes have their unintended consequence: coercive regulation. We employed the extensive firm-level Large and Medium Manufacturing (Industri Besar Sedang/IBS) census data combined with the Indonesian Democracy Index (Indeks Demokrasi Indonesia/IDI) at provincial level spanning from 2009 to 2015 and found that bribery hampered Indonesian firm output and productivity growth by 9.8% and 12.6%, respectively. …