Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 192: Offshoring of Services and Corruption: Do Firms Escape Corrupt Countries?

Patrik Karpaty () and Patrik Gustavsson Tingvall ()
Additional contact information
Patrik Karpaty: Örebro University
Patrik Gustavsson Tingvall: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden

Abstract: In this paper, we analyze how the offshoring of services by Swedish firms is affected by corruption in target economies. The results suggest that firms avoid corrupt countries and that corruption reduces the amount of offshored services. In addition, the sensitivity to corruption is highest for poor countries, and large and internationalized firms are the ones that tend to be the most sensitive to corruption.

Keywords: Corruption; Services; Offshoring; Gravity model; Firm level data

JEL-codes: C23; D22; F23; L24

23 pages, May 29, 2012

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