Democracy and Corruption

Markus Brueckner
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Markus Brueckner: Research School of Economics, Australian National University, Kingsley, ACT 2601, Australia
Authors registered in the RePEc Author Service: Markus Brueckner

JRFM, 2021, vol. 14, issue 10, 1-14

Abstract: I examine the relationship between democracy and the perceived risk of corruption in a panel of 130 countries. My panel model controls for country fixed effects and enables the estimation of a within-country relationship between democracy and corruption. My main finding is that democracy significantly reduces the risk of corruption, but only in countries where ethnic fractionalization is low. In strongly fractionalized countries a transition from autocracy to democracy does not significantly reduce corruption. One explanation for these findings is that the corruption-reducing effect of greater accountability of politicians under democracy is undermined by the common pool problem; fractionalization increases the severity of the common pool problem.

Keywords: corruption; democracy; fractionalization; common pool problem (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
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