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The impact of liberalization on bureaucratic corruption

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  • Baksi, Soham
  • Bose, Pinaki
  • Pandey, Manish

Abstract

Liberalization increases the number of goods available for consumption within a country. Since bureaucrats value variety, this raises the marginal utility of accepting a bribe. This "benefit effect" is counteracted by an increasing "cost effect" from corruption deterrence activities that arise due to greater international pressure to curb corruption. The interaction of these two effects can lead to a non-monotonic relation between liberalization and corruption. Moreover, pre-commitment to deterrence activities is shown to be more effective in controlling corruption. Empirical evidence supports the existence of a non-monotonic relation between economic openness and corruption among developing countries.

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  • Baksi, Soham & Bose, Pinaki & Pandey, Manish, 2009. "The impact of liberalization on bureaucratic corruption," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 214-224, October.
    • Handle: RePEc:eee:jeborg:v:72:y:2009:i:1:p:214-224
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    2. Krisztina Kis-Katos & Günther G. Schulze, 2013. "Corruption in Southeast Asia: a survey of recent research," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 27(1), pages 79-109, May.
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    4. DeMaria, Federica & Franco, Chiara & Solferino, Nazaria, 2015. "Corruption and innovation: the mediating role of trade," AICCON Working Papers 139-2015, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    5. Vivekananda Mukherjee & Siddhartha Mitra, 2013. "Does a Salary Hike Reduce Corruption?," Economics Bulletin, AccessEcon, vol. 33(4), pages 2540-2544.
    6. Rajeev K Goel & Jelena Budak & Edo Rajh, 2013. "Bureaucratic Monopoly and the Nature and Timing of Bribes: Evidence from Croatian Data," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 55(1), pages 43-58, March.
    7. Van-Ha Le & Jakob de Haan & Erik Dietzenbacher & Jakob de Haan, 2013. "Do Higher Government Wages Reduce Corruption? Evidence Based on a Novel Dataset," CESifo Working Paper Series 4254, CESifo.
    8. Marjit, Sugata & Mukherjee, Vivekananda, 2014. "Rent-Seeking and Reform: Relationship Revisited," MPRA Paper 56443, University Library of Munich, Germany.
    9. Schumacher, Ingmar, 2013. "Political stability, corruption and trust in politicians," Economic Modelling, Elsevier, vol. 31(C), pages 359-369.
    10. Orhan Cengiz, 2021. "The Political Economics of Trade Openness and Its Impacts on Corruption," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 71(71-2), pages 499-525, December.
    11. Rajeev K. Goel & Ummad Mazhar & James W. Saunoris, 2018. "Market Contestability and Bribe Solicitations: Evidence Across Stages of Firms' Operations," CESifo Working Paper Series 6981, CESifo.
    12. Choudhury, Sanchari, 2019. "WTO membership and corruption," European Journal of Political Economy, Elsevier, vol. 60(C).
    13. repec:ers:journl:v:xx:y:2017:i:3a:p:538-553 is not listed on IDEAS
    14. Antonio Estache, 2014. "Infrastructure and Corruption: a Brief Survey," Working Papers ECARES ECARES 2014-37, ULB -- Universite Libre de Bruxelles.

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