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How Privatizations Affect the Level of Perceived Corruption

Author

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  • G. Gulsun Arikan

    (Bogazici University, Turkey)

Abstract

State economic enterprises' decisions are very open to manipulations by bureaucrats and politicians, making the public sector a potential breeding ground for corrupt activities of both monetary and non-monetary forms. Consequently, privatizations would be expected to have a remedial role. Getting rid of the state's productive assets, however, might not reduce corruption if it fails to sever the official—firm connection. The process of privatization, moreover, is notorious for causing corruption. It is up to observation to determine the exact effect of privatizations on corruption. This article attempts to make the first formal, empirical assessment of this relationship, using data made available by the wave of privatizations in the nineties. Results suggest that higher privatization leads to an increase in corruption.

Suggested Citation

  • G. Gulsun Arikan, 2008. "How Privatizations Affect the Level of Perceived Corruption," Public Finance Review, , vol. 36(6), pages 706-727, November.
  • Handle: RePEc:sae:pubfin:v:36:y:2008:i:6:p:706-727
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    Cited by:

    1. Steve Billon & Robert Gillanders, 2016. "State ownership and corruption," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(6), pages 1074-1092, December.
    2. repec:clh:resear:v:5:y:2012:i:3 is not listed on IDEAS
    3. Veronika Belousova & Rajeev K. Goel & Iikka Korhonen, 2016. "Corruption perceptions versus corruption incidence: Competition for rents across Russian regions," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(1), pages 172-187, January.
    4. Yeti Nisha Madhoo & Shyam Nath, 2010. "Beneficiary Charges: The Cinderella of Subnational Finance," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1317, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Veronika Belousova & Rajeev K. Goel & Iikka Korhonen, 2016. "Corruption perceptions versus corruption incidence: Competition for rents across Russian regions," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(1), pages 172-187, January.

    More about this item

    Keywords

    corruption; privatization; transition economy;

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