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

  • Coolidge, Jacqueline
  • Rose-Ackerman, Susan
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    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.

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    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1780.

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    Date of creation: 30 Jun 1997
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    Handle: RePEc:wbk:wbrwps:1780
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    1. Ihonvbere, Julius O., 1993. "Economic crisis, structural adjustment and social crisis in Nigeria," World Development, Elsevier, vol. 21(1), pages 141-153, January.
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    8. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
    9. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
    10. John Mukum Mbaku, 1996. "Bureaucratic Corruption in Africa: The Futility of Cleanups," Cato Journal, Cato Journal, Cato Institute, vol. 16(1), pages 99-118, Spring/Su.
    11. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    12. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
    13. Chew, David C. E., 1990. "Internal adjustments to falling civil service salaries: Insights from Uganda," World Development, Elsevier, vol. 18(7), pages 1003-1014, July.
    14. Wade, Robert, 1984. "Irrigation reform in conditions of populist anarchy : An Indian case," Journal of Development Economics, Elsevier, vol. 14(3), pages 285-303, April.
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