Ethnic Diversity, Democracy, and Corruption
AbstractI study the link between ethnic diversity, democracy, and corruption. In a static model, I show that contrary to conventional wisdom, corruption might emerge as a negative externality of democracy. This occurs through ethnicity, which appears as a rent-extracting technology in a democratic society. Extending the model into a dynamic framework, I find that this technology of extraction operates only at the early stage of democracy. Its impact tends to phase out as democracy matures. In other words, the model predicts that democracy exhibits a threshold effect on corruption.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 07/218.
Date of creation: 01 Sep 2007
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-11-03 (All new papers)
- NEP-DEV-2007-11-03 (Development)
- NEP-POL-2007-11-03 (Positive Political Economics)
- NEP-SOC-2007-11-03 (Social Norms & Social Capital)
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