TY  - JOUR
AU  - Wei,Shang-Jin
TI  - Why is Corruption So Much More Taxing Than Tax? Arbitrariness Kills
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6255
PY  - 1997
Y2  - November 1997
UR  - http://www.nber.org/papers/w6255
L1  - http://www.nber.org/papers/w6255.pdf
N1  - Author contact info:
Shang-Jin Wei
Graduate School of Business
Columbia University
Uris Hall 619
3022 Broadway
New York, NY 10027-6902
Tel: 212/854-9139
E-Mail: shangjin.wei@columbia.edu
AB  - This paper examines the effect of corruption-induced uncertainty on foreign direct" investment.  The measure of uncertainty is constructed based on unpublished individual survey" responses on levels of corruption in host countries.  The result is striking.  The effect is negative statistically significant and quantitatively large.  An increase in the uncertainty level from that of" Singapore to that of Mexico, at the average level of corruption in the sample raising the tax rate on multinational firms by 32 percentage points. Hence (uncertainty) effect can and does have first-order importance.
ER  -