Endogenous Corruption in Economic Development

Keith Blackburn, Niloy Bose and M. Emranul Haque ()

Centre for Growth and Business Cycle Research Discussion Paper Series from Economics, The University of Manchester

Abstract: This paper presents an analysis of the joint determination of bureaucratic corruption and economic development. The analysis is based on a simple neo-classical growth model in which bureaucrats are employed as agents of the government to collect taxes from households. Corruption is reflected in bribery and tax evasion as bureaucrats conspire with households to provide false information to the government. Costly concealment of this activity leads to a loss of resources available for productive investments. The incentive for an individual bureaucrat to accept a bribe depends on the number of other bureaucrats who are expected to accept bribes. This strategic interaction in bureaucratic decision making produces multiple (frequency-dependent) equilibria associated with different incidences of corruption. The predictions of the model accord strongly with recent empirical evidence.

Pages: 28 pages
Date: 2002
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Endogenous corruption in economic development (2010)
Working Paper: Endogenous Corruption in Economic Development (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:man:cgbcrp:22

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