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Corruption, Rule of Law, and Economic Efficiency: Selected Anecdotic Evidence of Bureaucratic Corruption from the Czech and Slovak Republics

Author

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  • Ladislava Grochova

    (Department of Economics, Faculty of Business and Economics, Mendel University in Brno)

  • Tomas Otahal

    (Department of Economics, Faculty of Business and Economics, Mendel University in Brno)

Abstract

Can corruption improve economic efficiency? Classical political economists argue that corruption undermines the rule of law (Smith 2001, chap 5). The modern Public Choice proponents argue that corruption might influence the efficiency of the rule of law. While Chicago Public Choice scholars model how corruption improves efficiency of the rule of law and thus the overall economic efficiency, the Virginia Public Choice models explain how corruption reduces efficiency of the rule of law and thus the overall economic efficiency. In this paper, we present a brief survey distinguishing among arguments of the Chicago Public Choice and Virginia Public Choice schools on how corruption influences economic efficiency. We present selected quasi-experimental anecdotic evidence of bureaucratic corruption from the early period of transition in the Czech and Slovak Republics to support the argument that the Virginia Public Choice explanation is more realistic because it includes the influence of bureaucratic corruption.

Suggested Citation

  • Ladislava Grochova & Tomas Otahal, 2011. "Corruption, Rule of Law, and Economic Efficiency: Selected Anecdotic Evidence of Bureaucratic Corruption from the Czech and Slovak Republics," MENDELU Working Papers in Business and Economics 2011-13, Mendel University in Brno, Faculty of Business and Economics.
    • Handle: RePEc:men:wpaper:13_2011
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    References listed on IDEAS

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    More about this item

    Keywords

    Bureaucracy; corruption; economic efficiency; Chicago Public Choice; Virginia Public Choice; rent-seeking; rule of law;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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