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High-level rent-seeking and corruption in African regimes : theory and cases

Author

Listed:
  • Coolidge, Jacqueline
  • Rose-Ackerman, Susan

Abstract

One explanation for Africa's failure to develop is the weakness of its public institutions. The authors consider one aspect of that weakness: rent-seeking and corruption at the top of government. Under the conditions of their model, and autocrat who seeks to maximize personal financial return favors an inefficiently large public sector and distorts other public sector priorities more than does an autocrat who seeks to maximize national income. However, if civil servants and public officials are also venal, the ruler will not favor so large a government. To show how African regimes operate, the authors present four cases illustrating issues raised by their theoretical model. Among their observations about the relationship between the motivations of top officials and policies to control corruption and other types of rent-seeking are these: A kleptocrat whose decision variable is the level of government intervention in the economy will select an excessive level of interventions, in which national income is less than optimal. Like all monopolies, the kleptocrat seeks productive efficiency except where inefficiency creates extra rents. Facing a kleptocrat, citizens prefer a smaller than optimal-sized government but get one that is too big. A kleptocrat may need to permit lower-level officials to share in corrupt gains thus introducing additional costs. He or she will then favor a smaller government than if subordinates could be perfectly controlled. Dropping the assumption of a single dimension of government intervention, the kleptocrat will favor a different mixture of tax, spending, and regulatory programs than will a benevolent autocrat. Dropping the assumption that rulers are writing on a clean slate, decisions to privatize or nationalize firms can differ across autocratic regimes. In particular, although kleptocrats will often be reluctant to privatize, they may in some cases support privatization that a benevolent ruler would oppose. Investment in countries with kleptocratic rules may have an overly short-run orientation. When rent-seeking at top levels is pervasive, both natural resources and foreign aid under state control may hamper, not encourage, growth.

Suggested Citation

  • Coolidge, Jacqueline & Rose-Ackerman, Susan, 1997. "High-level rent-seeking and corruption in African regimes : theory and cases," Policy Research Working Paper Series 1780, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1780
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sanjit Dhami & Ali Al-Nowaihi, 2007. "Corruption and the Provision of Public Output in a Hierarchical Asymmetric Information Relationship," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(4), pages 727-755, August.
    2. Bjorvatn, Kjetil & Soreide, Tina, 2005. "Corruption and privatization," European Journal of Political Economy, Elsevier, vol. 21(4), pages 903-914, December.
    3. Tripp, Aili Mari, 2012. "Donor Assistance and Political Reform in Tanzania," WIDER Working Paper Series 037, World Institute for Development Economic Research (UNU-WIDER).
    4. Asian Development Bank Institute, 2017. "Asian Economic Integration Report 2016," Working Papers id:11730, eSocialSciences.
    5. Mobolaji ‘Hakeem Ishola, 2012. "Fighting corruption: an expectation augmented approach," Humanomics: The International Journal of Systems and Ethics, Emerald Group Publishing, vol. 28(2), pages 133-147, May.
    6. McAllister, Ryan R.J. & Smajgl, Alex & Asafu-Adjaye, John, 2007. "Forest logging and institutional thresholds in developing south-east Asian economies: A conceptual model," Forest Policy and Economics, Elsevier, vol. 9(8), pages 1079-1089, May.
    7. Mikael Priks, 2011. "Judiciaries in corrupt societies," Economics of Governance, Springer, vol. 12(1), pages 75-88, March.
    8. Ufere, Nnaoke & Perelli, Sheri & Boland, Richard & Carlsson, Bo, 2012. "Merchants of Corruption: How Entrepreneurs Manufacture and Supply Bribes," World Development, Elsevier, vol. 40(12), pages 2440-2453.
    9. Susan-Rose Ackerman, 1997. "Corruption, Infefficiency and Economic Growth," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 24, pages 3-20.

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