The political economy of corruption and the role of economic opportunities

Kira Boerner () and Christa Hainz

The Economics of Transition, 2009, vol. 17, issue 2, pages 213-240

Abstract: In many developing and transition countries, we observe rather high levels of corruption. We argue that the missing political support for anti-corruption policies is due to a lack of economic and financial reforms. Our model is based on the fact that corrupt officials have to pay entry fees to get lucrative positions. In a probabilistic voting model, we show that this, together with the lack of economic opportunities, makes anti-corruption policies less likely. Compared to a reformed economy, more voters are part of the corrupt system and, more importantly, rents from corruption are distributed differently. Economic liberalization increases the support for anti-corruption measures. The additional effect of financial liberalization is ambiguous. Copyright (c) 2009 The Authors. Journal compilation (c) 2009 The European Bank for Reconstruction and Development.

Date: 2009

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