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Social welfare, corruption and credibility

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  • Jack H. Knott
  • Gary J. Miller

Abstract

Economic development requires that investments by entrepreneurs are not subject to expropriation by government. Unfortunately, public agencies often serve as the instruments by which political elites engage in corruption and extracting rents from the economy. The question is how to design institutions that credibly commit to a stable system of guarantees of property rights and contract enforcement. Principal agent theory and the new public management favor greater accountability of public managers to elected officials or eliminating public agencies through privatization. We argue for institutional designs that provide a degree of public agency autonomy. We show that public agency autonomy is a by-product of the competition between elites in democracies with multiple veto players. We show that transparency, professionalism, and legality help ensure that public managers do not engage in rent-extraction. The institutional design problem is how to induce public managers to serve the public interest without being fully responsive to elected political officials.

Suggested Citation

  • Jack H. Knott & Gary J. Miller, 2006. "Social welfare, corruption and credibility," Public Management Review, Taylor & Francis Journals, vol. 8(2), pages 227-252, June.
    • Handle: RePEc:taf:pubmgr:v:8:y:2006:i:2:p:227-252
    DOI: 10.1080/14719030600587455
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    References listed on IDEAS

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    1. Edward L. Glaeser & Raven Saks, 2004. "Corruption in America," NBER Working Papers 10821, National Bureau of Economic Research, Inc.
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    Cited by:

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    3. John Round & Colin C. Williams & Peter Rodgers, 2008. "Corruption in the post-Soviet workplace: the experiences of recent graduates in contemporary Ukraine," Work, Employment & Society, British Sociological Association, vol. 22(1), pages 149-166, March.
    4. Noemí Peña-Miguel & Beatriz Cuadrado-Ballesteros, 2021. "Effect of privatisation on income inequality: a European analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(3), pages 697-716, August.
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    6. Ucar, Erdem & Staer, Arsenio, 2020. "Local corruption and corporate social responsibility," Journal of Business Research, Elsevier, vol. 116(C), pages 266-282.
    7. Mustafa Yagci & Caner Bakir, 2021. "Bridging international political economy and public policy and administration research on central banking [The missing politics of central banks]," Policy and Society, Darryl S. Jarvis and M. Ramesh, vol. 40(4), pages 502-521.

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