The incidence and persistence of corruption in economic development

Abstract

Economic development and bureaucratic corruption are determined jointly in a dynamic general equilibrium model of growth, bribery and tax evasion. Corruption arises from the incentives of public and private agents to conspire in the concealment of information from the government. These incentives depend on aggregate economic activity which, in turn, depends on the incidence of corruption. The model produces multiple development regimes, transition between which may or may not occur. In accordance with recent empirical evidence, the relationship between corruption and development is predicted to be negative. r

Why is corruption less harmful in some countries than in others?

“…More recently, Blackburn et al (2006) reveal how corruption and development may interact with each other to produce threshold effects and multiple (history-dependent) long-run equilibria, including a poverty trap equilibrium. Similar results are established in Blackburn and Forgues-Puccio (2007), who also show how corruption can foster inequality by compromising the effectiveness of redistributive policy, and in Blackburn and Sarmah (2008), who show how corruption can influence demographic outcomes (life expectancy in particular) through its impact on the provision of public health expenditures.…”

“…11 To focus on this issue, our analysis abstracts from the potential endogeneity of corruption, as studied by Blackburn et al (2006) and Blackburn and Forgues-Puccio (2007). Rather, we follow the approach of others (e.g., Rivera-Batiz 2001; Sarte 2000) by taking, as given, the absence or presence of corrupt behaviour, and comparing the implications of these different scenarios.…”

“…Each type of intermediate input is indexed by i ∈ (0, M t ), with M t representing the most recently invented variety. Invention occurs through research and development by each of the N t new entrepreneurs, a 12 As in other analyses (e.g., Blackburn et al 2006;Rivera-Batiz 2001;Sarte 2000), we abstract from issues relating to occupational choice by assuming that individuals are separated exogenously at birth according to their skills or through some random selection process. In doing so we are able to simplify the analysis by not having to consider possible changes in the size of the bureaucracy and possible changes in the level of corruption that may result from this.…”

Thai Entourage Politics in the Socialist State of Vietnam

“…Over almost three decades since the economic reform named đổi mới, Vietnam has experienced dramatic economic growth, which has led to considerable poverty reduction programmes and policies nationwide (Salomon and Ket 2007;Baulch et al 2010;Blackburn et al 2006). Châu La Biên, like most other mountainous provinces in Vietnam, has enjoyed sizable state investments for infrastructure development (Baulch et al 2012).…”

Price adjustment under the table: Evidence on efficiency-enhancing corruption

“…See, for example, Leff (1964), Huntington (1968), Lui (1985), Beck and Maher (1986), Lien (1986), Aidt, et al (2005). According to this view, in economies where the economic dominance of government-run monopolies along with bureaucratic rigidities leads to inefficient outcomes (e.g., to constant shortages), corruption can serve as a means for achieving a higher degree of economic efficiency by "greasing the wheels" of government and overcoming cumbersome government bureaucratic regulations (red tape) by giving the bureaucrats the incentive to make their work more efficient despite the institutional and bureaucratic rigidities under which they operate (Blackburn, et al 2006). 29 In Georgia's centrally planned command economy, the government officials and bureaucrats were the ones that made the decisions of what will be produced, how much will be produced, and for whom will be produced.…”