IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i12p6870-d576925.html
   My bibliography  Save this article

The Impact of Corruption and Rent-Seeking Behavior upon Economic Wealth in the European Union from a Public Choice Approach

Author

Listed:
  • Gheorghița Dincă

    (Department of Finance and Accounting, Transilvania University of Braşov, 500036 Braşov, Romania)

  • Marius Sorin Dincă

    (Department of Finance and Accounting, Transilvania University of Braşov, 500036 Braşov, Romania)

  • Camelia Negri

    (Department of Finance and Accounting, Transilvania University of Braşov, 500036 Braşov, Romania)

  • Mihaela Bărbuță

    (Department of Finance and Accounting, Transilvania University of Braşov, 500036 Braşov, Romania)

Abstract

The current paper evaluates the impact of corruption and rent-seeking behaviors upon economic wealth in the European Union states using a public choice approach. The period of study is 2000 to 2019. To measure this impact, the present study uses a regression with variables reflecting governance quality and considered relevant, from a public choice approach, to corruption and rent-seeking. The main results of this study show a negative relationship between the level of corruption and economic wealth for all analyzed countries, especially for the ones that compose the new member states group. For all the EU member states, the variables capturing governance quality seem to have a positive impact on economic wealth. The higher levels of governance performance, synonymous with lower levels of rent-seeking, personal interest, and political pressures on state administrations, contribute to economic wealth, as public choice theory emphasizes. There is a need for reform and an increase in the efficiency of public institutions, especially in new member states.

Suggested Citation

  • Gheorghița Dincă & Marius Sorin Dincă & Camelia Negri & Mihaela Bărbuță, 2021. "The Impact of Corruption and Rent-Seeking Behavior upon Economic Wealth in the European Union from a Public Choice Approach," Sustainability, MDPI, vol. 13(12), pages 1-23, June.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:12:p:6870-:d:576925
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/12/6870/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/12/6870/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. IONESCU, Luminiţa & ROBERTSON, Kari, 2016. "Efficient Bureaucracy In The Public Sector For Safe Environment In Romania," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 16(3), pages 69-77.
    2. Acemoglu, Daron & Verdier, Thierry, 1998. "Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach," Economic Journal, Royal Economic Society, vol. 108(450), pages 1381-1403, September.
    3. Lambsdorff, Johann Graf, 2002. "Corruption and Rent-Seeking," Public Choice, Springer, vol. 113(1-2), pages 97-125, October.
    4. Neudorfer, Natascha S., 2018. "Commodities and corruption – How the middle class and democratic institutions lead to less corruption in resource-rich countries," Resources Policy, Elsevier, vol. 58(C), pages 175-191.
    5. Axel Dreher & Friedrich Schneider, 2010. "Corruption and the shadow economy: an empirical analysis," Public Choice, Springer, vol. 144(1), pages 215-238, July.
    6. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    7. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    8. repec:lic:licosd:31012 is not listed on IDEAS
    9. J. Lloyd Blackwell, III, 2005. "Estimation and testing of fixed-effect panel-data systems," Stata Journal, StataCorp LP, vol. 5(2), pages 202-207, June.
    10. Costa Junior, Celso J. & Garcia-Cintado, Alejandro C., 2021. "Rent-seeking in an emerging market: A DSGE approach," Economic Systems, Elsevier, vol. 45(2).
    11. Douglas Hibbs & Violeta Piculescu, 2005. "Institutions, Corruption and Tax Evasion in the Unofficial Economy," Public Economics 0508003, University Library of Munich, Germany.
    12. Capasso, Salvatore & Santoro, Lodovico, 2018. "Active and passive corruption: Theory and evidence," European Journal of Political Economy, Elsevier, vol. 52(C), pages 103-119.
    13. Saha, Shrabani & Gounder, Rukmani, 2013. "Corruption and economic development nexus: Variations across income levels in a non-linear framework," Economic Modelling, Elsevier, vol. 31(C), pages 70-79.
    14. Van, Germinal, 2020. "A Mathematical Theory of Economic Growth: The Public Choice Growth Model," MPRA Paper 99940, University Library of Munich, Germany, revised Mar 2020.
    15. Mr. Adil Mohommad & Mr. Anoop Singh & Ms. Sonali Jain-Chandra, 2012. "Inclusive Growth, Institutions, and the Underground Economy," IMF Working Papers 2012/047, International Monetary Fund.
    16. repec:jes:wpaper:y:2011:v:3:p:415-428 is not listed on IDEAS
    17. Robert Tollison, 2012. "The economic theory of rent seeking," Public Choice, Springer, vol. 152(1), pages 73-82, July.
    18. Chandan Sharma & Arup Mitra, 2019. "Corruption and Economic Growth: Some New Empirical Evidence from a Global Sample," Journal of International Development, John Wiley & Sons, Ltd., vol. 31(8), pages 691-719, November.
    19. Elinor Ostrom & Vincent Ostrom, 2004. "The Quest for Meaning in Public Choice," American Journal of Economics and Sociology, Wiley Blackwell, vol. 63(1), pages 105-147, January.
    20. Jac C Heckelman & Benjamin Powell, 2010. "Corruption and the Institutional Environment for Growth," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 52(3), pages 351-378, September.
    21. Evgeni Peev & Dennis C. Mueller, 2012. "Democracy, Economic Freedom and Growth in Transition Economies," Kyklos, Wiley Blackwell, vol. 65(3), pages 371-407, August.
    22. M. Peter van Hoek, 2008. "Enlarging the European Union: Taxation and Corruption in the New Member States," Springer Books, in: Robert W. McGee (ed.), Taxation and Public Finance in Transition and Developing Economies, chapter 2, pages 11-23, Springer.
    23. Douglas A. Houston, 2007. "Can Corruption Ever Improve an Economy?," Cato Journal, Cato Journal, Cato Institute, vol. 27(3), pages 325-342, Fall.
    24. Ioan Popescu, 2011. "The Expansion Of European Bureaucracy," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3(3), pages 415-428, September.
    25. Iqbal, Nasir & Daly, Vince, 2014. "Rent seeking opportunities and economic growth in transitional economies," Economic Modelling, Elsevier, vol. 37(C), pages 16-22.
    26. Toke S. Aidt, 2016. "Rent seeking and the economics of corruption," Constitutional Political Economy, Springer, vol. 27(2), pages 142-157, June.
    27. Gabriel Caldas Montes & Paulo Henrique Luna, 2021. "Fiscal transparency, legal system and perception of the control on corruption: empirical evidence from panel data," Empirical Economics, Springer, vol. 60(4), pages 2005-2037, April.
    28. Alexander Libman, 2012. "Democracy, size of bureaucracy, and economic growth: evidence from Russian regions," Empirical Economics, Springer, vol. 43(3), pages 1321-1352, December.
    29. Jeanet Sinding Bentzen, 2012. "How Bad is Corruption? Cross‐country Evidence of the Impact of Corruption on Economic Prosperity," Review of Development Economics, Wiley Blackwell, vol. 16(1), pages 167-184, February.
    30. Hasim Ak a & Ahmet Yilmaz Ata & Coskun Karaca, 2012. "Inflation and Corruption Relationship: Evidence from Panel Data in Developed and Developing Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 2(3), pages 281-295.
    31. M. Peter van der Hoek, 2008. "Corruption and Taxation in the New European Union Member States," Journal of Information Systems & Operations Management, Romanian-American University, vol. 2(2), pages 399-406, November.
    32. van der Hoek, M. Peter, 2008. "Enlarging the European Union: Taxation and Corruption in the New Member States," MPRA Paper 11546, University Library of Munich, Germany, revised 30 Aug 2007.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andri Ottesen & Dieter Thom & Rupali Bhagat & Rola Mourdaa, 2023. "Learning from the Future of Kuwait: Scenarios as a Learning Tool to Build Consensus for Actions Needed to Realize Vision 2035," Sustainability, MDPI, vol. 15(9), pages 1-25, April.
    2. Petr Wawrosz, 2022. "How Corruption Is and Should Be Investigated by Economic Theory," Economies, MDPI, vol. 10(12), pages 1-23, December.
    3. Muhammad Hafizuddin Yusof & Muhammad Abu Hanifah Mohd Haniff & Zulaikha Kamaruddin & Nurul Aifa Mohd Jaafar & Shamsul Baharin Saihani, 2023. "Investigating the Causality between Corruption and Economic Growth: A Systematic Review," Information Management and Business Review, AMH International, vol. 15(4), pages 492-501.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel Albalate & Germà Bel & Francisco González-Gómez & Andrés J. Picazo-Tadeo, 2017. "Weakening political connections by means of regulatory reform: Evidence from contracting out water services in Spain," Journal of Regulatory Economics, Springer, vol. 52(2), pages 211-235, October.
    2. Giuseppe Dari-Mattiacci & Eric Langlais & Bruno Lovat & Francesco Parisi, 2007. "Crowding-out in productive and redistributive rent-seeking," Public Choice, Springer, vol. 133(1), pages 199-229, October.
    3. Liu, Lu & Zhao, Qiuhong & Bi, Yanlin, 2020. "Why rent-seeking behavior may exist in Chinese mining safety production inspection system and how to alleviate it: A tripartite game analysis," Resources Policy, Elsevier, vol. 69(C).
    4. Zi Wen Vivien Wong & Fanyu Chen & Thian Hee Yiew, 2021. "Effects Of Rent-Seeking On Economic Growth In Low-Income Economies," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(2), pages 205-220, June.
    5. Victor I. Espinosa & José Antonio Peña-Ramos & Fátima Recuero-López, 2021. "The Political Economy of Rent-Seeking: Evidence from Spain’s Support Policies for Renewable Energy," Energies, MDPI, vol. 14(14), pages 1-16, July.
    6. Toke S. Aidt, 2016. "Rent seeking and the economics of corruption," Constitutional Political Economy, Springer, vol. 27(2), pages 142-157, June.
    7. Brzić, Barbara & Dabić, Marina & Kukura, Frane & Podobnik, Boris, 2021. "The effects of corruption and the fraction of private ownership on the productivity of telecommunication companies," Technology in Society, Elsevier, vol. 65(C).
    8. Njoya, Loudi & Ngouhouo, Ibrahim & Asongu, Simplice & Schneider, Friedrich, 2022. "The role of economic prosperity on informality in Africa: evidence of corruption thresholds from PSTR," MPRA Paper 119059, University Library of Munich, Germany.
    9. Randall G. Holcombe, 2018. "Checks and Balances: Enforcing Constitutional Constraints," Economies, MDPI, vol. 6(4), pages 1-12, October.
    10. Per Fredriksson, 2001. "How Pollution Taxes may Increase Pollution and Reduce Net Revenues," Public Choice, Springer, vol. 107(1), pages 65-85, April.
    11. Boggess, William G., 1995. "The Poverty Of Applied Policy Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(1), pages 1-12, July.
    12. Ladislava Grochova & Tomas Otahal, 2011. "Corruption, Rule of Law, and Economic Efficiency: Selected Anecdotic Evidence of Bureaucratic Corruption from the Czech and Slovak Republics," MENDELU Working Papers in Business and Economics 2011-13, Mendel University in Brno, Faculty of Business and Economics.
    13. Richard Damania & Per Fredriksson & Thomas Osang, 2004. "Collusion, Collective Action and Protection: Theory and Evidence," Public Choice, Springer, vol. 121(3), pages 279-308, February.
    14. Zi Wen Vivien Wong & Fanyu Chen & Siong Hook Law & Normaz Wana Ismail, 2022. "The Effects Of Rent Seeking Activities On Economic Growth In Middle-Income Countries," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(2), pages 215-234, August.
    15. Tariq Hussain & Khizra Rana, 2022. "Rent Seeking Policy, Institutions and Corruption in Specific Countries of the World," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(4), pages 283-291, December.
    16. E. Tsanana & X. Chapsa & C. Katrakilidis, 2016. "Is growth corrupted or bureaucratic? Panel evidence from the enlarged EU," Applied Economics, Taylor & Francis Journals, vol. 48(33), pages 3131-3147, July.
    17. Elena D’Agostino & Marco Alberto Benedetto & Giuseppe Sobbrio, 2021. "Tax evasion and government size: evidence from Italian provinces," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(3), pages 1149-1187, October.
    18. Juan Camilo Galvis Ciro & Guillermo David Hincapié-Vélez, 2022. "Los efectos de la corrupción sobre el gasto público en los departamentos de Colombia," Apuntes del Cenes, Universidad Pedagógica y Tecnológica de Colombia, vol. 41(73), pages 227-262, February.
    19. Jellal, Mohamed & Bouzahzah, Mohamed, 2012. "Rentes et corruption au maroc théorie et evidence [Morocco rents and corruption theory and evidence]," MPRA Paper 38750, University Library of Munich, Germany.
    20. Bologna, Jamie, 2016. "The effect of informal employment and corruption on income levels in Brazil," Journal of Comparative Economics, Elsevier, vol. 44(3), pages 657-695.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:12:p:6870-:d:576925. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.