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Determinants of Corruption: Government Effectiveness vs. Cultural Norms

Author

Listed:
  • Kapoor Mudit

    (Indian School of Business)

  • Ravi Shamika

    (Indian School of Business)

Abstract

This paper analyzes the parking behavior of United Nations diplomats in New York City and highlights the key limitation of an earlier work which claims cultural norms to be the significant determinant of corruption. We show that after controlling for Government Effectiveness index, which measures the quality of civil services and quality and quantity of public infrastructure in a country, the effect of culture on corruption becomes insignificant. However, the Country Corruption index and the Government Effectiveness index are strongly correlated which makes it difficult to identify the causal determinant of corruption. It is important to keep this correlation in mind before arriving at conclusions from empirical studies, because Country Corruption index could be proxying for other influences such as Government Effectiveness index, and ignoring this might lead us to falsely attribute the observed behavior to cultural or social norms alone. Understanding the relative importance of these potential causes of corruption is fundamental to policy recommendations.

Suggested Citation

  • Kapoor Mudit & Ravi Shamika, 2012. "Determinants of Corruption: Government Effectiveness vs. Cultural Norms," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-26, August.
    • Handle: RePEc:bpj:bejeap:v:12:y:2012:i:1:n:34
    DOI: 10.1515/1935-1682.3049
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    References listed on IDEAS

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    1. Shang-Jin Wei, 2000. "Local Corruption and Global Capital Flows," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2), pages 303-354.
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    5. Dilip Mookherjee & Pranab Bardhan, 2005. "Decentralization, Corruption And Government Accountability: An Overview," Boston University - Department of Economics - Working Papers Series WP2005-023, Boston University - Department of Economics, revised Jun 2005.
    6. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    7. Guriev, Sergei, 2004. "Red tape and corruption," Journal of Development Economics, Elsevier, vol. 73(2), pages 489-504, April.
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    Cited by:

    1. Sebastian I. Burduja & Rodica Milena Zaharia, 2019. "Romanian Business Leaders’ Perceptions of Business-to-Business Corruption: Leading More Responsible Businesses?," Sustainability, MDPI, vol. 11(20), pages 1-27, October.
    2. Christopoulou, Rebekka & Lillard, Dean R., 2015. "Is smoking behavior culturally determined? Evidence from British immigrants," Journal of Economic Behavior & Organization, Elsevier, vol. 110(C), pages 78-90.
    3. Kristyna Chabova, 2017. "Measuring corruption in Europe: public opinion surveys and composite indices," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(4), pages 1877-1900, July.
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