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Ethnic Diversity, Democracy, and Corruption

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  • Mr. Etienne B Yehoue

Abstract

I study the link between ethnic diversity, democracy, and corruption. In a static model, I show that contrary to conventional wisdom, corruption might emerge as a negative externality of democracy. This occurs through ethnicity, which appears as a rent-extracting technology in a democratic society. Extending the model into a dynamic framework, I find that this technology of extraction operates only at the early stage of democracy. Its impact tends to phase out as democracy matures. In other words, the model predicts that democracy exhibits a threshold effect on corruption.

Suggested Citation

  • Mr. Etienne B Yehoue, 2007. "Ethnic Diversity, Democracy, and Corruption," IMF Working Papers 2007/218, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2007/218
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    References listed on IDEAS

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    1. Bourguignon, Francois & Verdier, Thierry, 2000. "Oligarchy, democracy, inequality and growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 285-313, August.
    2. Baron, David P., 1994. "Electoral Competition with Informed and Uninformed Voters," American Political Science Review, Cambridge University Press, vol. 88(1), pages 33-47, March.
    3. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
    4. Gene M. Grossman & Elhanan Helpman, 1996. "Electoral Competition and Special Interest Politics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(2), pages 265-286.
    5. Roberto Perotti, 1993. "Political Equilibrium, Income Distribution, and Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(4), pages 755-776.
    6. Armendariz de Aghion, Beatriz, 1999. "On the design of a credit agreement with peer monitoring," Journal of Development Economics, Elsevier, vol. 60(1), pages 79-104, October.
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    Cited by:

    1. Štefan Šumah, 2024. "“Ethnic” Corruption: When Ethnic Identity Meets Political Corruption," Academicus International Scientific Journal, Entrepreneurship Training Center Albania, issue 30, pages 70-77, July.

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    WP; upper bound;

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