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The political economy of corruption and the role of economic opportunities1

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  • Kira Boerner
  • Christa Hainz

Abstract

In many developing and transition countries, we observe rather high levels of corruption. We argue that the missing political support for anti‐corruption policies is due to a lack of economic and financial reforms. Our model is based on the fact that corrupt officials have to pay entry fees to get lucrative positions. In a probabilistic voting model, we show that this, together with the lack of economic opportunities, makes anti‐corruption policies less likely. Compared to a reformed economy, more voters are part of the corrupt system and, more importantly, rents from corruption are distributed differently. Economic liberalization increases the support for anti‐corruption measures. The additional effect of financial liberalization is ambiguous.

Suggested Citation

  • Kira Boerner & Christa Hainz, 2009. "The political economy of corruption and the role of economic opportunities1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(2), pages 213-240, April.
    • Handle: RePEc:bla:etrans:v:17:y:2009:i:2:p:213-240
    DOI: 10.1111/j.1468-0351.2009.00354.x
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    Cited by:

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    2. Chandan Kumar Jha, 2020. "Financial Reforms and Corruption: Which Dimensions Matter?," International Review of Finance, International Review of Finance Ltd., vol. 20(2), pages 515-527, June.
    3. Belousova, Veronika & Rajeev, K. Goel & Korhonen, Iikka, 2011. "Causes of Corruption in Russia: A Disaggregated Analysis," Discussion Paper Series 557, Institute of Economic Research, Hitotsubashi University.
    4. Belousova, Veronika & Rajeev, K. Goel & Korhonen, Iikka, 2011. "Causes of Corruption in Russia: A Disaggregated Analysis," Discussion Paper Series 557, Institute of Economic Research, Hitotsubashi University.
    5. Rajeev Goel & Jelena Budak & Edo Rajh, 2012. "Factors Driving Bribe Payments: Survey Evidence from Croatia," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 19(1), pages 13-22, September.
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    8. Zhang, Dongyang & Guo, Yumei, 2019. "Financing R&D in Chinese private firms: Business associations or political connection?," Economic Modelling, Elsevier, vol. 79(C), pages 247-261.
    9. Driffield, Nigel L. & Mickiewicz, Tomasz & Temouri, Yama, 2013. "Institutional reforms, productivity and profitability: From rents to competition?," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 583-600.
    10. Majeed, Muhammad Tariq & MacDonald, Ronald, 2011. "Corruption and Financial Intermediation in a Panel of Regions: Cross-Border Effects of Corruption," SIRE Discussion Papers 2011-67, Scottish Institute for Research in Economics (SIRE).
    11. Zhang, Dongyang, 2021. "Marketization, environmental regulation, and eco-friendly productivity: A Malmquist–Luenberger index for pollution emissions of large Chinese firms," Journal of Asian Economics, Elsevier, vol. 76(C).
    12. Zhang, Dongyang & Liu, Deqiang, 2017. "Determinants of the capital structure of Chinese non-listed enterprises: Is TFP efficient?," Economic Systems, Elsevier, vol. 41(2), pages 179-202.
    13. Kapingura Forget Mingiri & S.I Ikhide & A Tsegaye, 2016. "The Relationship between External Financial Flows and Economic Growth in the Southern African Development Community (SADC): The Role of Institutions," Journal of Economics and Behavioral Studies, AMH International, vol. 8(1), pages 87-103.
    14. Veronika Belousova & Rajeev Goel & Iikka Korhonen, 2016. "Corruption perceptions versus corruption incidence: Competition for rents across Russian regions," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(1), pages 172-187, January.

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