Firm lobbying and influence in developing countries: a multilevel approach

Abstract

A large literature examines corporate political activity in the United States, but much less is known about firms’ lobbying activities and policy influence in developing countries. I argue that firm-level heterogeneity helps explain firms’ political behavior, while political institutions shape policymakers’ incentives to respond to business interests. The empirical analysis relies on the World Bank's Enterprise Survey, which covers over 20,000 firms operating in 42 developing and transition countries, to examine the determinants of lobbying and perceived policy influence. Multilevel estimates support the hypotheses that lobbying and influence increase with the firm's size and market power. Additionally, I find that firms report greater policy influence in democracies than in non-democracies.