Informal payments to public officials (% of firms)
Definition: Informal payments to public officials are the percentage of firms expected to make informal payments to public officials to "get things done" with regard to customs, taxes, licenses, regulations, services, and the like.
Description: The map below shows how Informal payments to public officials (% of firms) varies by country. The shade of the country corresponds to the magnitude of the indicator. The darker the shade, the higher the value. The country with the highest value in the world is Guinea, with a value of 84.80. The country with the lowest value in the world is Eritrea, with a value of 0.00.
Source: World Bank, Enterprise Surveys (http://www.enterprisesurveys.org/).
Development Relevance: Firms evaluating investment options, governments interested in improving business conditions, and economists seeking to explain economic performance have all grappled with defining and measuring the business environment. The firm-level data from Enterprise Surveys provide a useful tool for benchmarking economies across a large number of indicators measured at the firm level. Corruption by public officials may present a major administrative and financial burden on firms. Corruption creates an unfavorable business environment by undermining the operational efficiency of firms and raising the costs and risks associated with doing business. In some countries doing business requires informal payments to "get things done" in customs, taxes, licenses, regulations, services, and the like. Such corruption can harm the business environment by distorting policymaking, undermining government credibility, and diverting public resources.
Limitations and Exceptions: The sampling weights take care of the varying probabilities of selection across different strata. Under certain conditions, estimates' precision under stratified random sampling will be higher than under simple random sampling (lower standard errors may result from the estimation procedure). The strata for Enterprise Surveys are firm size, business sector, and geographic location within a country. Firm size levels are 5-19 (small), 20-99 (medium), and 100+ employees (large-sized firms). Since in most economies, the majority of firms are small and medium-sized, Enterprise Surveys oversample large firms since larger firms tend to be engines of job creation. Sector breakdown is usually manufacturing, retail, and other services. For larger economies, specific manufacturing sub-sectors are selected as additional strata on the basis of employment, value-added, and total number of establishments figures. Geographic locations within a country are selected based on which cities/regions collectively contain the majority of economic activity. Ideally the survey sample frame is derived from the universe of eligible firms obtained from the country's statistical office. Sometimes the master list of firms is obtained from other government agencies such as tax or business licensing authorities. In some cases, the list of firms is obtained from business associations or marketing databases. In a few cases, the sample frame is created via block enumeration, where the World Bank "manually" constructs a list of eligible firms after 1) partitioning a country's cities of major economic activity into clusters and blocks, 2) randomly selecting a subset of blocks which will then be enumerated. In surveys conducted since 2005-06, survey documentation which explains the source of the sample frame and any special circumstances encountered during survey fieldwork are included with the collected datasets.
Original Source Notes: All surveys were administered using the Enterprise Surveys methodology as outlined in the Methodology page which can be found from www.enterprisesurveys.org.
Statistical Concept and Methodology: The World Bank Enterprise Surveys gather firm-level data on the business environment of individual economies across the world and assess how business environment constraints affect productivity and job creation. The World Bank has collected this data from face-to-face interviews with business owners and top managers in over 110,000 firms in 128 economies. Of this total fully comparable data is available for 122 countries (close to 80,000 interviews) which are the source for the indicators of this section. The surveys cover a broad range of business environment topics including access to finance, corruption, infrastructure, informality, regulations and taxes, crime, competition, trade, and performance measures. A standardized survey, including country-specific questions, is typically conducted in an emerging economy every 3-4 years. For several countries, firm-level panel data are also available, allowing policymakers to track changes in the business environment over time. Confidentiality of the survey respondents and the sensitive information they provide is necessary to ensure the greatest degree of survey participation, integrity and confidence in the quality of the data. Surveys are usually carried out in cooperation with business organizations and government agencies promoting job creation and economic growth, but confidentiality is never compromised. Typically 1200-1800 interviews are conducted in larger economies, 360 interviews are conducted in medium-sized economies, and for smaller economies, 150 interviews take place. The manufacturing and services sectors are the primary business sectors of interest. This corresponds to firms classified with ISIC codes 15-37, 45, 50-52, 55, 60-64, and 72 (ISIC Rev.3.1). Formal (registered) companies with 5 or more employees are targeted for interview. Services firms include construction, retail, wholesale, hotels, restaurants, transport, storage, communications, and IT. Firms with 100% government/state ownership are not eligible to participate in an Enterprise Survey. In each country, businesses in the cities/regions of major economic activity are interviewed. The sampling methodology for Enterprise Surveys is stratified random sampling with replacement. Stratification variables include sector, firm size and geographic area.. In a stratified random sample, all population units are grouped within homogeneous groups and simple random samples are selected within each group. This method allows computing estimates for each of the strata with a specified level of precision while population estimates can also be estimated by properly weighting individual observations.