Corruption And The Outsider: Multinational Enterprises In The Transitional Economy Of Vietnam

Transitional Vietnam exhibits key characteristics that economists argue are conducive to corrupt practices and, by knock-on effects, to slower economic growth. The process of liberalisation has shifted the status quo in Vietnam, permitting entry by a wider pool of bribe-takers and bribe-givers. Standard economic definitions of corruption focus on the abuse of public office for private gain, whereby corrupt practices are modelled as distortions in the distribution of government provided goods and services. This paper modifies existing models, specifying corruption as a distortion to the definition, allocation and/or enforcement of property rights. The model incorporates an explicit role for the incentive set that shapes behaviour by government officials, private individuals and firms. Abuse of public office is modelled as a distortion to property rights, including the re-assignment of private rights as the result of lobbying or rent-seeking activities. Local norms may sanction corruption against certain groups. The MNE is one case in point; others include different ethnic, religious and socio-economic groups. As outsiders in an environment historically hostile to "outsiders", MNEs represent "easy" corruption targets.