BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/43
The findings show companies adjust to the level of administrative corruption in a region if corruption is a predictable and foreseeable component in an investment decision. If, however, the firm’s experience with administrative corruption in the region varies greatly, the unpredictability of corruption diminishes the company’s appetite for investment. Corporate eagerness to invest is also hurt by inconsistent enforcement of property rights and the possibility of unexpected hostile takeovers. While the study makes no policy recommendations, it reinforces earlier views that the uncertainty in the business environment discourages investment, which then impedes economic recovery in Russia.