Political Capacity and Corruption Nexus: Re-Examining Evidence for Developing Countries

Saranjam Baig, Cuneyt Yenigun and Khalid Mehmood Alam
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Saranjam Baig: College of Economics and Political Science, Sultan Qaboos University, Muscat 123, Oman
Cuneyt Yenigun: College of Economics and Political Science, Sultan Qaboos University, Muscat 123, Oman
Khalid Mehmood Alam: China Study Centre, Karakoram International University, Gilgit 15100, Pakistan

Economies, 2022, vol. 10, issue 6, 1-17

Abstract: This article examines the question of whether developing countries with strong political capacity have lower levels of corruption. Despite the ubiquity of literature on corruption, the relationship between a state’s political capacity and corruption has not been addressed by the existing academic literature. To measure the political capacity of a country, the authors have used relative political capacity (RPC), an indicator that gauges the effectiveness of governance by its ability to meet or exceed their expected extractive capabilities and its ability to implement a set of policy choices. On the one hand, politically capable and stable governments are in a position to pursue their political and economic goals, such as reducing corruption. On the other hand, a strong political capacity provides them with the opportunity for rent-seeking and corruption. This implies that a state’s strong political capacity can be either a ‘boon’ or ‘bane’ to implement a set of desired policy goals. Based on this assertion, the authors test the hypothesis of whether a strong relative political capacity increases or reduces the level of corruption. The analysis uses the ordinary least-squares and two-stage least squares methods for 98 developing countries to test the hypothesis. The findings suggest that the explanatory power of political capacity is at least as important as conventionally accepted causes of corruption, such as economic development, and democracy.

Keywords: relative political capacity; state’s capacity; institutions; corruption; developing countries (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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