What drives corruption and how corruption impacts business formation? A case study of Ukraine in a prospect of cross-country analysis
Sivula, Inna (2015)
2015
MDP in Public Economics and Public Finance (MGE)
Johtamiskorkeakoulu - School of Management
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Hyväksymispäivämäärä
2015-09-29
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:uta-201510282385
https://urn.fi/URN:NBN:fi:uta-201510282385
Tiivistelmä
As a citizen of Ukraine I am concerned about the prosperity of my home country. In this thesis I define the biggest obstacles for Ukraine s development in a prospect of a cross-country analysis. My main concern is that corruption is the biggest problem in Ukraine. I believe that corruption prevents the development of the country through its negative impact on private sector activity.
With this thesis I want to point out what Ukraine should take into consideration in order to eliminate corruption based on the experience of other countries. For this reason I primarily observe what drives corruption among countries. Secondly, I examine whether corruption affects business equally in all countries and what other factors are important for business development worldwide. Therefore, this thesis is based on the corruption facts observed in Ukraine and the results are obtained using the fixed effects method in the panel data.
The main findings indicate that the most significant drivers of corruption in all countries are lack of judicial autonomy and weak competition among political parties. Corruption did not show any significant impact on business formation until 2SLS estimator was applied. Hence, there is a weak causal effect that runs from corruption to business formation, meaning that in countries with lower corruption business activity is higher. In addition, availability of financial resources, less complex tax systems and more years of compulsory education are found to be positively associated with business activity.
With this thesis I want to point out what Ukraine should take into consideration in order to eliminate corruption based on the experience of other countries. For this reason I primarily observe what drives corruption among countries. Secondly, I examine whether corruption affects business equally in all countries and what other factors are important for business development worldwide. Therefore, this thesis is based on the corruption facts observed in Ukraine and the results are obtained using the fixed effects method in the panel data.
The main findings indicate that the most significant drivers of corruption in all countries are lack of judicial autonomy and weak competition among political parties. Corruption did not show any significant impact on business formation until 2SLS estimator was applied. Hence, there is a weak causal effect that runs from corruption to business formation, meaning that in countries with lower corruption business activity is higher. In addition, availability of financial resources, less complex tax systems and more years of compulsory education are found to be positively associated with business activity.