Corruption and the Local Business Environment: Insights from SMEs in 29 Philippine Cities

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This paper contributes to the international evidence on the possible factors linked to corruption using data on over 1,700 small and medium scale enterprises (SMEs) in 29 Philippine Cities covered by the 2009 Asian Institute of Management (AIM) Enterprise Survey. The results suggest that corruption appears to be linked to conditions that affect Philippine SMEs in a very pernicious way — more corruption is reported by firms located in cities with very poor business environments and weak provision of public goods. For instance, bribery reported among those who obtained their business permits 30 days late is 1.23 times compared to those that receive their permits on the same day.