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Public Expenditures, Bureaucratic Corruption and Economic Development

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Author Info
Keith Blackburn
Niloy Bose
M. Emranul Haque

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Abstract

This paper presents a dynamic general equilibrium analysis of public sector corruption and economic growth. In an economy with government intervention and capital accumulation, state-appointed bureaucrats are charged with the responsibility for procuring public goods which contribute to productive efficiency. Corruption arises because of an opportunity for bureaucrats to appropriate public funds by misinforming the government about the cost and quality of public goods provision. The incentive for each bureaucrat to do this depends on economy-wide outcomes which, in turn, depend on the behaviour of all bureaucrats. We establish the existence of multiple development regimes, together with the possibility of multiple, frequency-dependent equilibria. The predictions of our analysis accord strongly with recent empirical evidence on the causes and consequences of corruption in public office.

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Paper provided by Centre for Dynamic Macroeconomic Analysis in its series CDMA Conference Paper Series with number 0407.

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Date of creation: Jun 2004
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Handle: RePEc:san:cdmacp:0407

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  22. Besley, Timothy & McLaren, John, 1993. "Taxes and Bribery: The Role of Wage Incentives," Economic Journal, Royal Economic Society, vol. 103(416), pages 119-41, January. [Downloadable!] (restricted)
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  25. Rivera-Batiz, Francisco L, 2001. "International Financial Liberalization, Corruption, and Economic Growth," Review of International Economics, Blackwell Publishing, vol. 9(4), pages 727-37, November. [Downloadable!] (restricted)
  26. Rauch, James E. & Evans, Peter B., 2000. "Bureaucratic structure and bureaucratic performance in less developed countries," Journal of Public Economics, Elsevier, vol. 75(1), pages 49-71, January. [Downloadable!] (restricted)
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  30. Sah, Raaj K, 1991. "Social Osmosis and Patterns of Crime," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1272-95, December. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Djumashev, Ratbek, 2006. "Corrupt Bureaucracy and Growth," MPRA Paper 2082, University Library of Munich, Germany. [Downloadable!]
  2. Shankha Chakraborty & Era Dabla-Norris, 2009. "The Quality of Public Investment," IMF Working Papers 09/154, International Monetary Fund. [Downloadable!]
  3. M. Emranul Haque & Richard Kneller, 2007. "Business Cycle Synchronization of the Euro Area with the New and Negotiating Member Countries," Centre for Growth and Business Cycle Research Discussion Paper Series 92, Economics, The Univeristy of Manchester. [Downloadable!]
  4. Torrisi, Gianpiero, 2009. "Public infrastructure: definition, classification and measurement issues," MPRA Paper 12990, University Library of Munich, Germany. [Downloadable!]
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