Democracy, rule of law, corruption incentives and growth
We bridge the gap between the standard theory of growth and the mostly static theory of corruption. Some public investment can be diverted from its purpose by corrupt individuals. Voters determine the level of public investment subject to an incentive constraint equalizing the returns from productive and corrupt activities. We concentrate on two exogenous institutional parameters : the “technology of corruption” is the ease with which rent-seekers can capture a proportion of public spending. The “concentration of political power” is the extent to which rent-seekers have more political influence than other people. One theoretical prediction is that the effects of the two institutional parameters on income growth and equilibrium corruption are different according to the constraints that are binding at equilibrium. In particular, the effect of judicial quality on growth should be stronger when political power is concentrated. We estimate a system of equations where both corruption and incime growth are determined simultaneously and show that income growth is more affected by our proxies for legal and politiccal institutions in countries where political rights and judicial institutions respectively are limited.
|Date of creation:||01 Aug 2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Fax: +32 10473945
Web page: http://www.uclouvain.be/econEmail:
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mohtadi, Hamid & Roe, Terry L., 2001.
"Democracy, Rent Seeking, Public Spending And Growth,"
12981, University of Minnesota, Economic Development Center.
- Mohtadi, Hamid & Roe, Terry L., 2003. "Democracy, rent seeking, public spending and growth," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 445-466, March.
- Cragg, John G. & Donald, Stephen G., 1993. "Testing Identifiability and Specification in Instrumental Variable Models," Econometric Theory, Cambridge University Press, vol. 9(02), pages 222-240, April.
- La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert W., 1998.
"Law and Finance,"
3451310, Harvard University Department of Economics.
- Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, . "Law and Finance," Working Paper 19451, Harvard University OpenScholar.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," NBER Working Papers 5661, National Bureau of Economic Research, Inc.
- Rafael LaPorta & Florencio Lopez de-Silanes & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," Harvard Institute of Economic Research Working Papers 1768, Harvard - Institute of Economic Research.
- Stock, James H & Wright, Jonathan H & Yogo, Motohiro, 2002. "A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 518-29, October.
- Ngo Van Long & Gerhard Sorger, 2004.
"Insecure Property Rights and Growth: The Roles of Appropriation Costs, Wealth Effects, and Heterogeneity,"
CESifo Working Paper Series
1253, CESifo Group Munich.
- Ngo Long & Gerhard Sorger, 2006. "Insecure property rights and growth: the role of appropriation costs, wealth effects, and heterogeneity," Economic Theory, Springer, vol. 28(3), pages 513-529, 08.
- Carlos Leite & Jens Weidmann, 1999. "Does Mother Nature Corrupt; Natural Resources, Corruption, and Economic Growth," IMF Working Papers 99/85, International Monetary Fund.
- McKenzie, Lionel W., 2005. "Optimal economic growth, turnpike theorems and comparative dynamics," Handbook of Mathematical Economics, in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 2, volume 3, chapter 26, pages 1281-1355 Elsevier.
- Louis Putterman & Valerie Bockstette, 2000.
"States and Markets:the Advantage of an Early Start,"
2000-12, Brown University, Department of Economics.
- Bockstette, Valerie & Chanda, Areendam & Putterman, Louis, 2002. " States and Markets: The Advantage of an Early Start," Journal of Economic Growth, Springer, vol. 7(4), pages 347-69, December.
- Docquier, Frederic & Tarbalouti, Essaid, 2001. " Bribing Votes: A New Explanation to the "Inequality-Redistribution" Puzzle in LDCs," Public Choice, Springer, vol. 108(3-4), pages 259-72, September.
- James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
- Roberto Rigobon & Dani Rodrik, 2005. "Rule of law, democracy, openness, and income," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(3), pages 533-564, 07.
- repec:cup:cbooks:9780521806428 is not listed on IDEAS
- Miriam A. Golden & Lucio Picci, 2005. "Proposal For A New Measure Of Corruption, Illustrated With Italian Data," Economics and Politics, Wiley Blackwell, vol. 17, pages 37-75, 03.
- Coughlin, Peter & Nitzan, Shmuel, 1981. "Electoral outcomes with probabilistic voting and Nash social welfare maxima," Journal of Public Economics, Elsevier, vol. 15(1), pages 113-121, February.
- Isaac Ehrlich & Francis T. Lui, 1999. "Bureaucratic Corruption and Endogenous Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S270-S293, December.
- Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank.
- repec:cup:cbooks:9780521017039 is not listed on IDEAS
- repec:cup:cbooks:9780521001151 is not listed on IDEAS
- Theo Eicher & Cecilia García-Peñalosa & Tanguy van Ypersele, 2009. "Education, Corruption and Constitutional Reform," Working Papers UWEC-2007-17-P, University of Washington, Department of Economics.
- Cuong Le Van & Mathilde Maurel, 2006.
"Education, corruption and growth in developing countries,"
Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers)
- Cuong Le Van & Mathilde Maurel, 2006. "Education, corruption and growth in developing countries," Cahiers de la Maison des Sciences Economiques v06080, Université Panthéon-Sorbonne (Paris 1).
- repec:ner:tilbur:urn:nbn:nl:ui:12-3125517 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:ctl:louvec:2008024. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne DAVISTER-LOGIST)
If references are entirely missing, you can add them using this form.