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Corruption: Democracy, Autocracy, and Political Stability

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  • Kanybek Nur-tegin

    ()
    (Wilkes Honors College, Florida Atlantic University, 5353 Parkside Drive, Jupiter, FL 33410, U.S.A.)

  • Hans J. Czap

    ()
    (University of Michigan, Dearborn, FCS 121A, 19000 Hubbard Drive, Dearborn, MI 48126, U.S.A.)

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    Abstract

    The recent empirical literature on corruption has identified a long list of variables that correlate significantly with corruption but only five were distinguished by Leamer’s Extreme Bounds Analysis as robust to various samples, measures of corruption, and regression specifications. Among these five factors that were found to reduce corruption are decades-long tradition of democracy and political stability. In today’s world, however, there are many countries that combine one of these two robust determinants of corruption with the opposite of the other: politically stable autocracies or newly formed and unstable democracies. The central question raised in this paper is: Is it worth, in terms of corruption, for a country to trade stability with autocratic rule for political freedoms but with transitional instability? We find that the answer to this question is in the affirmative - the level of corruption is indeed lower in unstable democracies than in stable dictatorships. Our results are robust to various measures of corruption, alternative regressor indices, and regression specifications.

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    Bibliographic Info

    Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

    Volume (Year): 42 (2012)
    Issue (Month): 1 (March)
    Pages: 51-66

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    Handle: RePEc:eap:articl:v:42:y:2012:i:1:p:51-66

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    Keywords: corruption; democracy; autocracy; dictatorship; political stability;

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    1. Rodrik, Dani, 1998. "Democracies Pay Higher Wages," CEPR Discussion Papers 1776, C.E.P.R. Discussion Papers.
    2. Lorenzo Pellegrini & Reyer Gerlagh, 2008. "Causes of corruption: a survey of cross-country analyses and extended results," Economics of Governance, Springer, vol. 9(3), pages 245-263, July.
    3. Caselli, Francesco & Coleman II, Wilbur John, 2001. "Cross-Country Technology Diffusion: The Case of Computers," CEPR Discussion Papers 2744, C.E.P.R. Discussion Papers.
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    5. AlÌcia Adserý, 2003. "Are You Being Served? Political Accountability and Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 19(2), pages 445-490, October.
    6. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
    7. Van Rijckeghem, Caroline & Weder, Beatrice, 2001. "Bureaucratic corruption and the rate of temptation: do wages in the civil service affect corruption, and by how much?," Journal of Development Economics, Elsevier, vol. 65(2), pages 307-331, August.
    8. Campante, Filipe Robin & Chor, Davin & Do, Quoc-Anh, 2009. "Instability and the Incentives for Corruption," Scholarly Articles 4778510, Harvard Kennedy School of Government.
    9. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
    10. Danila Serra, 2006. "Empirical determinants of corruption: A sensitivity analysis," Public Choice, Springer, vol. 126(1), pages 225-256, January.
    11. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(3), pages 681-712, August.
    12. Mohtadi, Hamid & Roe, Terry L., 2001. "Democracy, Rent Seeking, Public Spending And Growth," Bulletins 12981, University of Minnesota, Economic Development Center.
    13. Roy Cerqueti & Raffaella Coppier & Gustavo Piga, 2009. "Corruption, growth and ethnolinguistic fractionalization: a theoretical model," Working Papers, Macerata University, Department of Finance and Economic Sciences 57-2009, Macerata University, Department of Finance and Economic Sciences, revised Jan 2010.
    14. Chowdhury, Shyamal K., 2004. "The effect of democracy and press freedom on corruption: an empirical test," Economics Letters, Elsevier, vol. 85(1), pages 93-101, October.
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