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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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    5. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
    6. 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.
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