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The high-tech trap: corruption risks in a new wave of privatization

Author

Listed:
  • Isacco Berte

    (X - École polytechnique - IP Paris - Institut Polytechnique de Paris)

  • Louise Demoury

    (X - École polytechnique - IP Paris - Institut Polytechnique de Paris)

  • Farid Gasmi

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Dorgyles C.M. Kouakou

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, UR - Université de Rennes)

  • Niklas Patzig

    (HEC Paris - Ecole des Hautes Etudes Commerciales)

  • Laura Recuero Virto

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine, ICN Business School)

  • Peter Saba

    (DVHE - De Vinci Higher Education, DVRC - De Vinci Research Center - DVHE - De Vinci Higher Education)

Abstract

Using data from 103 countries between 1990 and 2017, this article provides econometric evidence of a robust nonlinear relationship between corruption and privatization in the telecommunications sector, an inverted U-shape where moderate corruption initially facilitates privatization, but beyond a threshold (50% of the Bayesian Corruption Index), higher corruption reverses this trend. Our results provide empirical confirmation of the nonlinear hypothesis advanced by Laffont & Meleu (1999), but with a new urgency: in today's digital age, this dynamic constitutes a high-tech trap, where corruption risks not only derail reform but embed it into the digital infrastructure that underpins the foundations of modern states. In addition, ownership structures have grown increasingly hybrid, and corruption now interacts with governance challenges that extend beyond efficiency and market design to long-term issues of economic value distribution, technological control, and strategic risk, amplifying the potential for regulatory capture and rent-seeking behavior.

Suggested Citation

  • Isacco Berte & Louise Demoury & Farid Gasmi & Dorgyles C.M. Kouakou & Niklas Patzig & Laura Recuero Virto & Peter Saba, 2026. "The high-tech trap: corruption risks in a new wave of privatization," Post-Print hal-05759167, HAL.
    • Handle: RePEc:hal:journl:hal-05759167
    DOI: 10.1007/s11149-026-09524-0
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    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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