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Corruption and the effects of economic freedom

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  • Pieroni, L.
  • d'Agostino, G.

Abstract

The prediction that economic freedom is beneficial in reducing corruption has not been found to be universally robust in empirical studies. The present work reviews this relationship by using firms' data in a cross-country survey and argues that approaches using aggregated macro data have not been able to explain it appropriately. We model cross-country variations of the microfounded economic freedom–corruption relationship using multilevel models. Additionally, we analyse this relationship by disentangling the determinants for several components of economic freedom because not all areas affect corruption equally. The results show that the extent of the macro-effects on the measures of (micro)economic freedom for corruption, identified by the degree of economic development of a country, can explain why a lack of competition policies and government regulations may yield more corruption. Estimations for Africa and transition economy subsamples confirm our conjectures.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 29 (2013)
Issue (Month): C ()
Pages: 54-72

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Handle: RePEc:eee:poleco:v:29:y:2013:i:c:p:54-72

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Web page: http://www.elsevier.com/locate/inca/505544

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Keywords: Corruption; Economic freedom; Multilevel models;

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Cited by:
  1. Kodila Tedika, Oasis, 2012. "Empirical Survey on the Causes of the Corruption
    [Aperçu empirique sur les causes de la corruption]
    ," MPRA Paper 41484, University Library of Munich, Germany.
  2. Vetter, Stefan, 2013. "Delegating decision rights for anticipated rewards as an alternative to corruption: An experiment," European Journal of Political Economy, Elsevier, vol. 31(C), pages 188-204.
  3. d'Agostino, Giorgio & Scarlato, Margherita, 2012. "Inclusive Institutions, Innovation and Economic Growth: Estimates for European Countries," MPRA Paper 43098, University Library of Munich, Germany.

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