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Localization and corruption : panacea or pandora's box?

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Author Info
Gurgur, Tugrul
Shah, Anwar

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Abstract

An extensive literature on the relationship between decentralization (or localization) and corruption has developed in recent years. While some authors argue that there is a positive relationship between decentralization and corruption, others claim that decentralization in fact leads to a reduction in the level of corruption. This important policy question has not yet been laid to rest, since previous empirical work simply uses eclectic regressions and lacks a conceptual framework to discover the root causes of corruption. This paper attempts to fill this void by presenting a framework in identifying the drivers of corruption both conceptually and empirically in order to isolate the role of centralized decision-making on corruption. The following results emerge: 1) For a sample of 30 countries (developing and industrial), corruption is caused by: a lack of service-orientation in the public sector, weak democratic institutions, economic isolation (closed economy), colonial past, internal bureaucratic controls and centralized decision making. 2) Decentralization is found to have a negative impact on corruption, with the effect being stronger in unitary than in federal countries.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3486.

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Date of creation: 01 Jan 2005
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Handle: RePEc:wbk:wbrwps:3486

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Keywords: National Governance; Decentralization; Corruption&Anitcorruption Law; Public Sector Corruption&Anticorruption Measures; Pharmaceuticals&Pharmacoeconomics; National Governance; Governance Indicators; Corruption&Anitcorruption Law; Public Sector Corruption&Anticorruption Measures; TF054599-PHRD-KYRGYZ REPUBLIC: WATER MANAGEMENT IMPROVEMENT PROJECT;

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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.:
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  2. Caroline van Rijckeghem & Beatrice Weder, 1997. "Corruption and the Rate of Temptation - Do Low Wages in the Civil Service Cause Corruption?," IMF Working Papers 97/73, International Monetary Fund.
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  9. Seabright, Paul, 1996. "Accountability and decentralisation in government: An incomplete contracts model," European Economic Review, Elsevier, vol. 40(1), pages 61-89, January. [Downloadable!] (restricted)
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  13. Pranab Bardhan & Dilip Mookherjee, 2000. "Corruption and Decentralization of Infrastructure Delivery in Developing Countries," Boston University - Institute for Economic Development 104, Boston University, Institute for Economic Development.
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(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. Mikael Priks, 2007. "Judiciaries in Corrupt Societies," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  2. Shah, Anwar, 2004. "Fiscal decentralization in developing and transition economies: progress, problems, and the promise," Policy Research Working Paper Series 3282, The World Bank. [Downloadable!]
  3. James E. Alt & David Dreyer Lassen, 2008. "Inequality and Corruption: Evidence from US States," EPRU Working Paper Series 08-02, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]
  4. Shah, Anwar, 2006. "Corruption and decentralized public governance," Policy Research Working Paper Series 3824, The World Bank. [Downloadable!]
  5. Schaeffer, Michael & Yilmaz, Serdar, 2008. "Strengthening local government budgeting and accountability," Policy Research Working Paper Series 4767, The World Bank. [Downloadable!]
  6. Anwar Shah & Theresa Thompson & Heng-fu Zou, 2004. "Decentralising the public sector: The Impact of Decentralisation on Service Delivery, Corruption, Fiscal Management and Growth in Developing and Emerging Market Economies: A Synthesis of Empirical Evi," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 2(1), pages 10-14, October. [Downloadable!]
  7. Odd-Helge Fjeldstad, 2004. "Decentralisation and corruption," CMI Working Papers WP 2004: 10, CMI (Chr. Michelsen Institute), Bergen, Norway. [Downloadable!]
  8. Shah, Anwar & Thompson, Theresa, 2004. "Implementing decentralized local governance: a treacherous road with potholes, detours, and road closures," Policy Research Working Paper Series 3353, The World Bank. [Downloadable!]
  9. Jorge Martinez-Vazquez & Robert McNab, 2001. "Fiscal Decentralization and Economic Growth," International Studies Program Working Paper Series, at AYSPS, GSU paper0101, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
    Other versions:
  10. Huther, Jeff & Shah, Anwar, 2000. "Anti-corruption policies and programs : a framework for evaluation," Policy Research Working Paper Series 2501, The World Bank. [Downloadable!]
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