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Lobbying, Corruption and Political Influence

  • Nauro F. Campos

    ()

  • Francesco Giovannoni

    ()

Conventional wisdom suggests that lobbying is the preferred mean for exerting political influence in rich countries and corruption the preferred one in poor countries. Analyses of their joint effects are understandably rare. This paper provides a theoretical framework that focus on the relationship between lobbying and corruption (that is, it investigates under what conditions they are complements or substitutes). The paper also offers novel econometric evidence on lobbying, corruption and influence using data for about 4000 firms in 25 transition countries. Our results show that (a) lobbying and corruption are substitutes, if anything; (b) firm size, age, ownership, per capita GDP and political stability are important determinants of lobby membership; and (c) lobbying seems to be a much more effective instrument for political influence than corruption, even in poorer, less developed countries.

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File URL: http://www.brunel.ac.uk/__data/assets/pdf_file/0010/342676/CEDI_06-14.pdf
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Paper provided by Centre for Economic Development and Institutions(CEDI), Brunel University in its series CEDI Discussion Paper Series with number 06-14.

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Length: 36 pages
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:edb:cedidp:06-14
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  1. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Aggregating governance indicators," Policy Research Working Paper Series 2195, The World Bank.
  2. Bennedsen, Morten & Feldmann, Sven E., 2006. "Informational lobbying and political contributions," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 631-656, May.
  3. Bischoff, Ivo, 2003. " Determinants of the Increase in the Number of Interest Groups in Western Democracies: Theoretical Considerations and Evidence from 21 OECD Countries," Public Choice, Springer, vol. 114(1-2), pages 197-218, January.
  4. Richard Damania & Erkan Yalcin, 2005. "Corruption and Political Competition," Microeconomics 0510012, EconWPA.
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  6. Milanovic, Branko & Hoff, Karla & Horowitz, Shale, 2008. "Political Alternation as a Restraint on Investing in Influence: Evidence from the Post-Communist Transition," MPRA Paper 11829, University Library of Munich, Germany.
  7. Ribar, David C, 1994. "Teenage Fertility and High School Completion," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 413-24, August.
  8. Stephen Morris & Stephen Coate, 1999. "Policy Persistence," American Economic Review, American Economic Association, vol. 89(5), pages 1327-1336, December.
  9. David Mckenzie & Hillel Rapoport, 2004. "Network Effects and the Dynamics of Migration and Inequality: Theory and Evidence from Mexico," Working Papers 2004-3, Bar-Ilan University, Department of Economics.
  10. Potters, Jan & Sloof, Randolph, 1996. "Interest groups: A survey of empirical models that try to assess their influence," European Journal of Political Economy, Elsevier, vol. 12(3), pages 403-442, November.
  11. Newey, Whitney K., 1987. "Efficient estimation of limited dependent variable models with endogenous explanatory variables," Journal of Econometrics, Elsevier, vol. 36(3), pages 231-250, November.
  12. Torsten Persson & Guido Tabellini, 2005. "The Economic Effects of Constitutions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661926, June.
  13. Pinelopi Koujianou Goldbe & Giovanni Maggi, 1997. "Protection for Sale: An Empirical Investigation," NBER Working Papers 5942, National Bureau of Economic Research, Inc.
  14. Campos, Nauro F & Giovannoni, Francesco, 2005. "The Determinants of Asset Stripping: Theory and Evidence from the Transition Economies," CEPR Discussion Papers 5215, C.E.P.R. Discussion Papers.
  15. Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
  16. Richard E. Baldwin & Frédéric Robert-Nicoud, 2007. "Entry and Asymmetric Lobbying: Why Governments Pick Losers," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 1064-1093, 09.
  17. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
  18. 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.
  19. Sobel, Russell S & Garrett, Thomas A, 2002. " On the Measurement of Rent Seeking and Its Social Opportunity Cost," Public Choice, Springer, vol. 112(1-2), pages 115-36, July.
  20. Svensson, Jakob, 2000. "Who must pay bribes and how much? Evidence from a cross-section of firms," Policy Research Working Paper Series 2486, The World Bank.
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  22. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
  23. Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, vol. 113(491), pages F632-F652, November.
  24. Devashish Mitra & Dimitrios D. Thomakos & Mehmet A. Ulubaşoglu, 2002. ""Protection For Sale" In A Developing Country: Democracy Vs. Dictatorship," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 497-508, August.
  25. repec:ner:tilbur:urn:nbn:nl:ui:12-73373 is not listed on IDEAS
  26. Per G. Fredriksson & Muthukumara Mani & Richard Damania, 2003. "The Persistence of Corruption and Regulatory Compliance Failures; Theory and Evidence," IMF Working Papers 03/172, International Monetary Fund.
  27. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
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