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Public Expenditures, Bureaucratic Corruption And Economic Development

Author

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  • KEITH BLACKBURN
  • NILOY BOSE
  • M. EMRANUL HAQUE

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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Suggested Citation

  • Keith Blackburn & Niloy Bose & M. Emranul Haque, 2011. "Public Expenditures, Bureaucratic Corruption And Economic Development," Manchester School, University of Manchester, vol. 79(3), pages 405-428, June.
    • Handle: RePEc:bla:manchs:v:79:y:2011:i:3:p:405-428
    DOI: j.1467-9957.2009.02168.x
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    Cited by:

    1. Deku, Solomon Y. & Lim, King Yoong, 2024. "Oil price effects on optimal extraction–exploration and offshore entities: An applied-theoretical and empirical investigation in oil-rich economies," Energy Economics, Elsevier, vol. 129(C).
    2. Djumashev, Ratbek, 2006. "Corrupt Bureaucracy and Growth," MPRA Paper 2082, University Library of Munich, Germany.
    3. Varvarigos, Dimitrios & Arsenis, Panagiotis, 2015. "Corruption, fertility, and human capital," Journal of Economic Behavior & Organization, Elsevier, vol. 109(C), pages 145-162.
    4. Lim, King Yoong, 2019. "Modelling the dynamics of corruption and unemployment with heterogeneous labour," Economic Modelling, Elsevier, vol. 79(C), pages 98-117.
    5. Ratbek Dzhumashev, 2006. "Public Goods, Corruption And Growth???," Monash Economics Working Papers 15/06, Monash University, Department of Economics.
    6. Torrisi, Gianpiero, 2009. "Public infrastructure: definition, classification and measurement issues," MPRA Paper 12990, University Library of Munich, Germany.
    7. Olofinbiyi, Tolulope & Mogues, Tewodaj, "undated". "Who Influences Government Spending in Agriculture? The Roles of Public Actors in Subnational Funding Allocation in Nigeria," Feed the Future Innovation Lab for Food Security Policy Research Papers 259572, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
    8. M. Emranul Haque & Richard Kneller, 2015. "Why does Public Investment Fail to Raise Economic Growth? The Role of Corruption," Manchester School, University of Manchester, vol. 83(6), pages 623-651, December.
    9. Omar A. Guerrero & Gonzalo Castañeda, 2021. "Does expenditure in public governance guarantee less corruption? Non-linearities and complementarities of the rule of law," Economics of Governance, Springer, vol. 22(2), pages 139-164, June.
    10. Damir Piplica, 2011. "Corruption And Inflation In Transition Eu Member Countries," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 20(2), pages 469-506, december.
    11. Rajeev K. Goel & James W. Saunoris, 2016. "Military Buildups, Economic Development and Corruption," Manchester School, University of Manchester, vol. 84(6), pages 697-722, December.
    12. Ratbek, Ratbek, 2010. "Nonlinear effect of corruption, uncertainty, and growth," MPRA Paper 24834, University Library of Munich, Germany.
    13. Vijay Varadi & C. Vanlalramsanga, 2012. "Assessment of the Impact of Fiscal Policy on Economic Growth: An Empirical Analysis," EERI Research Paper Series EERI_RP_2012_06, Economics and Econometrics Research Institute (EERI), Brussels.
    14. Kiyoka Akimoto, 2021. "Corruption, mortality rates, and development: policies for escaping from the poverty trap," Journal of Economics, Springer, vol. 133(1), pages 1-26, June.
    15. Corrado, Germana & Rossetti, Fiammetta, 2018. "Public corruption: A study across regions in Italy," Journal of Policy Modeling, Elsevier, vol. 40(6), pages 1126-1139.
    16. Dzhumashev, Ratbek, 2009. "Is there a direct effect of corruption on growth?," MPRA Paper 18489, University Library of Munich, Germany.
    17. 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 University of Manchester.
    18. Tamara Fioroni & Andrea Mario Lavezzi & Giovanni Trovato, 2025. "Organized Crime, Corruption, and Economic Growth," Journal of Regional Science, Wiley Blackwell, vol. 65(2), pages 535-560, March.
    19. Mohamed Ben Mimoun & Asma Raies, 2022. "Is social spending pro‐poor in developing countries? The role of governance and political freedom," Poverty & Public Policy, John Wiley & Sons, vol. 14(3), pages 214-241, September.
    20. Keith Blackburn & Gareth Downing, 2015. "Deconcentration, Corruption and Economic Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 209, Economics, The University of Manchester.
    21. Chakraborty Shankha & Dabla-Norris Era, 2011. "The Quality of Public Investment," The B.E. Journal of Macroeconomics, De Gruyter, vol. 11(1), pages 1-29, August.
    22. Omar A. Guerrero & Gonzalo Casta~neda, 2019. "Does Better Governance Guarantee Less Corruption? Evidence of Loss in Effectiveness of the Rule of Law," Papers 1902.00428, arXiv.org.
    23. Fazekas,Mihaly & Poltoratskaia,Viktoriia & Tóth,Bence, 2023. "Corruption Risks and State Capture in Bulgarian Public Procurement," Policy Research Working Paper Series 10444, The World Bank.

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