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The Political Economy of Corruption: A Philippine Illustrationa

Author

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  • James Roumasset

    (Department of Economics, University of Hawaii at Manoa
    University of Hawaii Economic Research Organization)

Abstract

This essay explores the nature, causes, and consequences of corruption as it pertains to entire regimes. Grand corruption is modeled as a type of unproductive rent-seeking at the highest levels of government. The economic costs of corruption are assumed to increase in the decentralization (and relaxation) of its governance, increase convexly in the percentage extracted, and decreasing in the opportunities for productive rent-seeking. Combining these assumptions with the benefits of corruption yields the results that optimal corruption revenues are increasing in greed of the regime and in economic opportunities but that the economic costs of corruption may be highest in the least avaricious regime. The theory is illustrated with a stylized account of corruption in three Philippine administrations, from 1973-1998. Policy implications are discussed, including the role of the economist in making corruption less attractive.

Suggested Citation

  • James Roumasset, 2008. "The Political Economy of Corruption: A Philippine Illustrationa," Working Papers 200805, University of Hawaii at Manoa, Department of Economics.
    • Handle: RePEc:hai:wpaper:200805
    as

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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_08-5.pdf
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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