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Corruption and Technology-Induced Private Sector Development

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  • Jean-François Ruhashyankiko
  • Etienne B. Yehoue
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    Abstract

    This paper asks whether corruption might be the outcome of a lack of outside options for public officials or civil servants. We propose an occupational choice model embedded in an agency framework to address the issue. We show that technology-induced private sector expansion leads to a decline in publicly supplied corruption as it provides outside options to public officials who might otherwise engage in corruption. We provide empirical evidence that strongly shows that technology-induced private sector development is associated with a decline in aggregate corruption. This suggests that the decline in publicly supplied corruption outweighs the potential increase in privately supplied corruption that could result from private sector expansion.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/198.

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    Length: 32
    Date of creation: 01 Aug 2006
    Date of revision:
    Handle: RePEc:imf:imfwpa:06/198

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    Related research

    Keywords: Economic models; public sector; state-owned enterprises; private sector development; nationalization; labor organization;

    This paper has been announced in the following NEP Reports:

    References

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    1. Alesina, Alberto & Weder, Beatrice, 2002. "Do Corrupt Governments Receive Less Foreign Aid?," Scholarly Articles 4553011, Harvard University Department of Economics.
    2. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, Elsevier, vol. 76(3), pages 399-457, June.
    3. Wacziarg, Romain & Alesina, Alberto & Devleeschauwer, Arnaud & Easterly, William & Kurlat, Sergio, 2002. "Fractionalization," Research Papers, Stanford University, Graduate School of Business 1744, Stanford University, Graduate School of Business.
    4. Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 113(491), pages F632-F652, November.
    5. Shang-Jin Wei, 1997. "How Taxing is Corruption on International Investors?," NBER Working Papers 6030, National Bureau of Economic Research, Inc.
    6. Paldam, Martin, 2002. "The cross-country pattern of corruption: economics, culture and the seesaw dynamics," European Journal of Political Economy, Elsevier, Elsevier, vol. 18(2), pages 215-240, June.
    7. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(3), pages 681-712, August.
    8. Isaac Ehrlich & Francis T. Lui, 1999. "Bureaucratic Corruption and Endogenous Economic Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 107(S6), pages S270-S293, December.
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