Economics of Political Clientelism and Corruption — A Theoretical Pathway

Rasit Pertev

No 10473, Policy Research Working Paper Series from The World Bank

Abstract: This paper proposes a preliminary economic model of political clientelism and corruption in developing countries with weak rule of law. It explains why this corruption is often chronic and persistent, and further examines its impact on fragility, conflict, and violence. The basic model is built in three stages: (i) political party strategies vis-à-vis clientelist options using a game-theoretical approach, (ii) strategies of using state repression and violence to complement electoral clientelism, and (iii) strategies of geographical/ethnic entities on remaining within a given republic or breaking away. The model predicts that the first clientelist party in power can monopolize government for long periods and further consolidate power by blending in state violence. Political clientelism and corruption are likely to provoke geographically distinct communities and movements to challenge the sovereignty and territorial integrity of the country concerned. The impact on fragility is predicted as greatest during monopolistic and dictatorial clientelism. Governance structures of inegalitarian or unjust local traditional authorities are shown to be an important independent factor provoking separatism. Separatist movements are predicted to be left leaning or egalitarian in the beginning of their struggle. As economies grow and shift away from a patronage-based private sector toward a productive one, individuals are likely to be protective of their enterprises and incomes against the aleatory decisions of a clientelist government. Therefore, a substantially enhanced investment in a productive private sector may likely be a better longer term anti-corruption strategy than exclusively focusing on governance, accountability, and accounting measures.

Date: 2023-06-07
New Economics Papers: this item is included in nep-pol
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