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The political economy of corruption and the role of economic opportunities

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  • Kira Boerner
  • Christa Hainz

Abstract

In many developing and transition countries, we observe rather high levels of corruption. We argue that the missing political support for anti-corruption policies is due to a lack of economic and financial reforms. Our model is based on the fact that corrupt officials have to pay entry fees to get lucrative positions. In a probabilistic voting model, we show that this, together with the lack of economic opportunities, makes anti-corruption policies less likely. Compared to a reformed economy, more voters are part of the corrupt system and, more importantly, rents from corruption are distributed differently. Economic liberalization increases the support for anti-corruption measures. The additional effect of financial liberalization is ambiguous. Copyright (c) 2009 The Authors. Journal compilation (c) 2009 The European Bank for Reconstruction and Development.

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Bibliographic Info

Article provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.

Volume (Year): 17 (2009)
Issue (Month): 2 (04)
Pages: 213-240

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Handle: RePEc:bla:etrans:v:17:y:2009:i:2:p:213-240

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Cited by:
  1. Driffield, Nigel L. & Mickiewicz, Tomasz & Temouri, Yama, 2013. "Institutional reforms, productivity and profitability: From rents to competition?," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 583-600.
  2. Majeed, Muhammad Tariq & MacDonald, Ronald, 2011. "Corruption and Financial Intermediation in a Panel of Regions: Cross-Border Effects of Corruption," SIRE Discussion Papers 2011-67, Scottish Institute for Research in Economics (SIRE).
  3. Rajeev Goel & Jelena Budak & Edo Rajh, 2012. "Factors Driving Bribe Payments: Survey Evidence from Croatia," Transition Studies Review, Springer, vol. 19(1), pages 13-22, September.

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