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The impact of liberalization on bureaucratic corruption

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

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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File URL: http://www.sciencedirect.com/science/article/pii/S0167-2681(09)00127-9
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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 72 (2009)
Issue (Month): 1 (October)
Pages: 214-224

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Handle: RePEc:eee:jeborg:v:72:y:2009:i:1:p:214-224
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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