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Corruption in a Model of Growth: Political Reputation, Competition and Shocks

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  • Ventelou, Bruno

Abstract

The article tries to incorporate "political corruption" (top level corruption) into economic growth analysis. We propose a microeconomic framework. An agent of the public sector, who wants to optimize his cash flow resulting from budget misappropriations, will be highly sensitive to the instability related to his office. The natural equilibrium for the politician will be to fall into a "high political instability - low growth" trap, in which corruption appears endemic. However, the control of corruption by society will be possible. We consider a model in which alternative politicians compete with the incumbent politician but benefit from a common political reputation. It is shown that this situation leads to "dynamic collective reputation", which should restrain misappropriation practices. This theoretical framework will be useful in defining a "sustainable" degree of political competition and in understanding the asymmetric effects of extrinsic shocks on the growth process. Copyright 2002 by Kluwer Academic Publishers

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  • Ventelou, Bruno, 2002. "Corruption in a Model of Growth: Political Reputation, Competition and Shocks," Public Choice, Springer, vol. 110(1-2), pages 23-40, January.
    • Handle: RePEc:kap:pubcho:v:110:y:2002:i:1-2:p:23-40
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    Cited by:

    1. Nicholas Apergis & Dan Constantin Dănuleţiu, 2013. "Public deficit, public debt, corruption and economic freedom: some empirical evidence from Romania," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 16(48), pages 3-22, June.
    2. Neeman Zvika & Paserman M. Daniele & Simhon Avi, 2008. "Corruption and Openness," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-40, December.
    3. Ugur, Mehmet & Dasgupta, Nandini, 2011. "Corruption and economic growth: A meta-analysis of the evidence on low-income countries and beyond," MPRA Paper 31226, University Library of Munich, Germany, revised 31 May 2011.
    4. Giuseppe Di Vita, 2023. "The economic impact of legislative complexity and corruption: A cross‐country analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1801-1825, April.
    5. Giorgio Bellettini & Paolo Roberti, 2020. "Politicians’ coherence and government debt," Public Choice, Springer, vol. 182(1), pages 73-91, January.
    6. Leilei Gu & Jinyu Liu & Yuchao Peng, 2022. "Locality Stereotype, CEO Trustworthiness and Stock Price Crash Risk: Evidence from China," Journal of Business Ethics, Springer, vol. 175(4), pages 773-797, February.
    7. Vita, Giuseppe Di, 2021. "Political corruption and legislative complexity: Two sides of same coin?," Structural Change and Economic Dynamics, Elsevier, vol. 57(C), pages 136-147.
    8. Vial, Virginie & Hanoteau, Julien, 2010. "Corruption, Manufacturing Plant Growth, and the Asian Paradox: Indonesian Evidence," World Development, Elsevier, vol. 38(5), pages 693-705, May.
    9. Santiago Lago-Peñas & Bruno Ventelou, 2006. "The Effects of Regional Sizing on Growth," Public Choice, Springer, vol. 127(3), pages 407-427, June.
    10. Duret, Elsa & Ventelou, Bruno, 2004. "Regionalization, public spending and growth: a stylized model dealing with 'predatory states'," Economic Modelling, Elsevier, vol. 21(6), pages 1039-1050, December.
    11. Mtiraoui, Abderraouf, 2015. "Corruption et développement économique: Application aux secteurs de l’éducation et de la santé dans la zone MENA [Corruption and Economic Development: Application to the sectors of education and he," MPRA Paper 64306, University Library of Munich, Germany.

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