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The Political Economy of Corruption: A Philippine Illustrationa

James Roumasset

No 200805, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: This essay explores the nature, causes, and consequences of corruption as it pertains to entire regimes. Grand corruption is modeled as a type of unproductive rent-seeking at the highest levels of government. The economic costs of corruption are assumed to increase in the decentralization (and relaxation) of its governance, increase convexly in the percentage extracted, and decreasing in the opportunities for productive rent-seeking. Combining these assumptions with the benefits of corruption yields the results that optimal corruption revenues are increasing in greed of the regime and in economic opportunities but that the economic costs of corruption may be highest in the least avaricious regime. The theory is illustrated with a stylized account of corruption in three Philippine administrations, from 1973-1998. Policy implications are discussed, including the role of the economist in making corruption less attractive.

Keywords: Corruption; Philippines; kleptocracy (search for similar items in EconPapers)
JEL-codes: H11 K42 O5 (search for similar items in EconPapers)
Pages: 20
Date: 2008-10-27
New Economics Papers: this item is included in nep-law and nep-pol
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http://www.economics.hawaii.edu/research/workingpapers/WP_08-5.pdf First version, 2008 (application/pdf)

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