How middle-men can undermine anti-corruption reforms

Kjetil Bjorvatn (), Gaute Torsvik and Bertil Tungodden
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Kjetil Bjorvatn: NORWEGIAN SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION, Postal: Department of Economics, Helleveien 30, N-5045 Bergen, Norway, http://www.nhh.no/en/research---faculty/department-of-economics/sam/cv/bjorvatn,-kjetil.aspx

No 12/04, Working Papers in Economics from University of Bergen, Department of Economics

Abstract: The anti-corruption reform in the Tanzanian tax bureaucracy in the mid-1990s was apparently a short-lived success. In the wake of the reform, a number of “tax experts” established themselves in the market, many of them being laid off tax bureaucrats. We argue that middle-men can undermine the effect of an anti-corruption reform by reducing the uncertainty that firms face vis-à-vis a reformed tax bureaucracy, which in turn may encourage firms to pay bribes rather than taxes. Indeed, under some circumstances, middle-men can cause corruption to be higher after the reform than before the reform. Since the demand for middle-men may increase with the extent of the reform, we also demonstrate that a small reform may be more efficient in combatting corruption than a more radical reform.

Keywords: Corruption; reform; middle-men; institutions (search for similar items in EconPapers)
JEL-codes: H26 K42 O12 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2004-12-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: How Middle-men can Undermine Anti-corruption Reforms (2005)
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