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A Theory of Misgovernance

Author

Listed:
  • Banerjee, A.V.

Abstract

This paper tries to explain why government bureaucraties are often associated with red tape, corruption and lack of incentives. The paper identifies two specific ingredients which together can provide an explanation - the fact that governments o ften act precisely in situations where markets fail and the presence of agency problems within the government. We shoe that thses problems are exacerbated at low levels of development and in bureaucracies dealing with poor people. We also argue that we ne ed to posit the existence of a welfare-oriented constituency within the government in order to explain red tape and corruption.

Suggested Citation

  • Banerjee, A.V., 1997. "A Theory of Misgovernance," Working papers 97-4, Massachusetts Institute of Technology (MIT), Department of Economics.
    • Handle: RePEc:mit:worpap:97-4
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    Keywords

    GOVERNMENT ; CORRUPTION ; BUREAUCRACY;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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