Quantifying the legacy of trauma: The long-term impact of the African slave trade on contemporary firm corruption

Abstract

This study examines the long-term impact of the African slave trade on present-day corporate corruption in Africa. Analyzing data from over 30,000 firms across 41 African countries between 2006 and 2021, we find a robust positive relationship between historical slave export and modern firm-level corruption. The results suggest that ethnic fractionalization, diminished trust, and weak institutions are potential channels linking the slave trade to current corruption. In countries with a history of extensive slave export, firms are more likely to engage in tax avoidance, circumvent government interactions, and operate informally due to prevalent corruption.