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Endogenous corruption in economic development

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Author Info

  • Keith Blackburn
  • Niloy Bose
  • M. Emranul Haque

Abstract

Purpose – The purpose of this paper is to present an analysis of the joint determination of bureaucratic corruption and economic development. Design/methodology/approach – The analysis is based on a simple model of growth in which bureaucrats are employed as agents of the government to collect taxes from households. Findings – Corruption is reflected in bribery and tax evasion as bureaucrats conspire with households in providing false information to the government. Costly concealment of this activity leads to a loss of resources available for productive investments. The incentive for a bureaucrat to accept a bribe depends on economy-wide outcomes, which, in turn, depend on the number of other bureaucrats who accept bribes. The paper establishes the existence of multiple development regimes, together with the possibility of both history- and frequency-dependent equilibria. The predictions of the analysis accord strongly with recent empirical evidence. Originality/value – The paper provides insights into the issue, and in doing so, makes further inroads to the macroeconomics of misgovernance.

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Bibliographic Info

Article provided by Emerald Group Publishing in its journal Journal of Economic Studies.

Volume (Year): 37 (2010)
Issue (Month): 1 (January)
Pages: 4-25

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Handle: RePEc:eme:jespps:v:37:y:2010:i:1:p:4-25

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Related research

Keywords: Bribery; Corruption; Economic development;

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Cited by:
  1. Ramirez, Carlos D., 2014. "Is corruption in China “out of control”? A comparison with the US in historical perspective," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 76-91.
  2. Roy Cerqueti & Raffaella Coppier & Gustavo Piga, 2012. "Corruption, growth and ethnic fractionalization: a theoretical model," Journal of Economics, Springer, vol. 106(2), pages 153-181, June.
  3. Bose, Niloy & Capasso, Salvatore & Murshid, Antu Panini, 2008. "Threshold Effects of Corruption: Theory and Evidence," World Development, Elsevier, vol. 36(7), pages 1173-1191, July.
  4. Keith Blackburn & Gonzalo F. Forgues-Puccio, 2005. "Financial Liberalisation, Bureaucratic Corruption and Economic Devlopment," The School of Economics Discussion Paper Series 0531, Economics, The University of Manchester.

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