Endogenous corruption in economic development
AbstractPurpose – 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 InfoArticle provided by Emerald Group Publishing in its journal Journal of Economic Studies.
Volume (Year): 37 (2010)
Issue (Month): 1 (January)
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Other versions of this item:
- K Blackburn & N Bose & M E Haque, 2002. "Endogenous Corruption in Economic Development," Centre for Growth and Business Cycle Research Discussion Paper Series 22, Economics, The Univeristy of Manchester.
- K Blackburn & N Bose & M E Haque, 2003. "Endogenous Corruption in Economic Development," The School of Economics Discussion Paper Series 0302, Economics, The University of Manchester.
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- Keith Blackburn & Gonzalo F. Forgues-Puccio, 2005.
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- Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2010. "Financial liberalization, bureaucratic corruption and economic development," Journal of International Money and Finance, Elsevier, vol. 29(7), pages 1321-1339, November.
- Keith Blackburn & Gonzalo F. Forgues-Puccio, 2008. "Financial Liberalisation, Bureaucratic Corruption and Economic Development," Development Research Working Paper Series 06/2008, Institute for Advanced Development Studies.
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