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Can capitalism restrain public perceived corruption? Some evidence

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  • FARIA, HUGO J.
  • MORALES, DANIEL R.
  • PINEDA, NATASHA
  • MONTESINOS, HUGO M.

Abstract

A growing body of evidence documents a vast array of economic and social ill-effects of public perceived corruption. These findings and the scant evidence of recent success in the fight against corruption beg the question: how to abate it? We document the existence of a negative, statistically significant and quantitatively large impact of economic freedom (our proxy for institutions of capitalism, markets and competition) on public corruption. This negative response of corruption to economic freedom holds after allowing for non-linearities interacting economic freedom and political rights, endowments, legal families, ethnicity and for robust determinants of corruption uncovered by Daniel Treisman [‘What Have We Learned About the Causes of Corruption From Ten Years of Cross-National Empirical Research?’, Annual Review of Political Science, 10: 211–244], such as income, democracy, freedom of the press and fuel exports. Thus, this paper helps to explain why high-income prosperous countries exhibit low levels of public perceived corruption, and why honesty is a normal good.

Suggested Citation

  • Faria, Hugo J. & Morales, Daniel R. & Pineda, Natasha & Montesinos, Hugo M., 2012. "Can capitalism restrain public perceived corruption? Some evidence," Journal of Institutional Economics, Cambridge University Press, vol. 8(4), pages 511-535, December.
    • Handle: RePEc:cup:jinsec:v:8:y:2012:i:04:p:511-535_00
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    Cited by:

    1. Pierre Cahuc & Yann Algan, 2009. "Civic Virtue and Labor Market Institutions," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 111-145, January.
    2. repec:hal:spmain:info:hdl:2441/8812 is not listed on IDEAS
    3. Pellegrini Lorenzo & Luca Tasciotti, 2019. "Corruption: Public and Private," Working Papers 220, Department of Economics, SOAS University of London, UK.
    4. Pierre Cahuc & Yann Algan, 2009. "Civic Virtue and Labor Market Institutions," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 111-145, January.
    5. Dincer, Oguzhan & Gunalp, Burak, 2020. "The effects of federal regulations on corruption in U.S. States," European Journal of Political Economy, Elsevier, vol. 65(C).

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