Presentation Title
Can Political Participation by Firms Increase Government Legitimacy and Regulatory Compliance in Developing Countries?
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Gibson Hall 296

Professor of Political Science
Duke University

Firms in developing countries commonly choose not to comply with regulations due to low opinions of government legitimacy and enforcement capacity. In this paper, we describe the results of a randomized controlled trial in Vietnam designed to test whether this threat to public interest can be reduced by providing firms the opportunity to comment on draft regulations. We find that firms given the opportunity to participate improved their views of government legitimacy more than other firms over the study period. Treatment firms were 8-10 percent more likely to allow inspections by chemical safety experts working for a government-affiliated business association. Most importantly, they also demonstrated greater regulatory compliance on the factory floor, especially with costlier requirements. None of these three main outcomes was positively influenced by early transmission of information during the participation period, none required that firms actually take up the opportunity to participate, and all were concentrated among small and medium-sized enterprises.