Believe it or not, corruption can help entrepreneurs in some situations. Some research points out that bribes can grease the cogs of bureaucracy in highly regulated economies and make it possible for entrepreneurs to achieve their goal of starting a business. But make no mistake: in general, corruption is a deterrent to potential entrepreneurs, and countries should strive for less regulation rather than more corruption.
In sub-Saharan Africa, South Asia and other regions with widespread corruption and difficult business climates, the entrepreneurial spirit is often stifled, and when it is not, entrepreneurial energy is channeled into informal sectors outside formal legal and financial systems. Unregistered firms may thrive: in some countries the informal sector makes up around 40 percent or more of economies. But such businesses don’t contribute much to the public welfare as they don’t pay taxes and sometimes pose a danger to the public. Informal businesses themselves rarely if ever are capable of reaching their growth potential because of impediments of an informal economy: “higher capital and transportation costs, more storage problems, greater difficulty hiring quality staff and less ability to enforce contracts”.

Countries that want to tap entrepreneurial energy start with relaxing their regulatory regimes. This reduces the potential for corruption. For example, according to the World Bank’s Doing Business 2011 report, Kazakhstan, Tajikistan and Hungary have made significant progress in deregulating their economies, thereby improving conditions for starting a business. This promotes much stronger economic growth than the opposite strategy – increasing regulation and counting on entrepreneurs to make the system work by greasing the wheel.