Localization and corruption: panacea or pandora's box?
Tugrul Gurgur () and
Anwar Shah ()
No 581, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics
An extensive literature on the relationship between decentralization (or localization) and corruption has developed in recent years. While some authors argue that there is a positive relationship between decentralization and corruption, others claim that decentralization in fact leads to a reduction in the level of corruption. This important policy question has not yet been laid to rest, since previous empirical work simply uses eclectic regressions and lacks a conceptual framework to discover the root causes of corruption. This paper attempts to fill this void by presenting a framework in identifying the drivers of corruption both conceptually and empirically in order to isolate the role of centralized decision-making on corruption. The following results emerge: 1) For a sample of 30 countries (developing and industrial), corruption is caused by: a lack of service-orientation in the public sector, weak democratic institutions, economic isolation (closed economy), colonial past, internal bureaucratic controls and centralized decision making. 2) Decentralization is found to have a negative impact on corruption, with the effect being stronger in unitary than in federal countries.
Pages: 39 pages
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Published in Annals of Economics and Finance, May 2014, pages 109-136.
Published in Policy Research Working Paper Series with number 3486.
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Journal Article: Localization and corruption: panacea or pandora's box? (2014)
Working Paper: Localization and corruption: panacea or pandora's box? (2005)
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