Corruption: Democracy, Autocracy, and Political Stability
AbstractThe 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 InfoArticle 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)
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corruption; democracy; autocracy; dictatorship; political stability;
Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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