IDEAS home Printed from https://ideas.repec.org/p/men/wpaper/13_2011.html
   My bibliography  Save this paper

Corruption, Rule of Law, and Economic Efficiency: Selected Anecdotic Evidence of Bureaucratic Corruption from the Czech and Slovak Republics

Author

Listed:
  • Ladislava Grochova

    (Department of Economics, Faculty of Business and Economics, Mendel University in Brno)

  • Tomas Otahal

    (Department of Economics, Faculty of Business and Economics, Mendel University in Brno)

Abstract

Can corruption improve economic efficiency? Classical political economists argue that corruption undermines the rule of law (Smith 2001, chap 5). The modern Public Choice proponents argue that corruption might influence the efficiency of the rule of law. While Chicago Public Choice scholars model how corruption improves efficiency of the rule of law and thus the overall economic efficiency, the Virginia Public Choice models explain how corruption reduces efficiency of the rule of law and thus the overall economic efficiency. In this paper, we present a brief survey distinguishing among arguments of the Chicago Public Choice and Virginia Public Choice schools on how corruption influences economic efficiency. We present selected quasi-experimental anecdotic evidence of bureaucratic corruption from the early period of transition in the Czech and Slovak Republics to support the argument that the Virginia Public Choice explanation is more realistic because it includes the influence of bureaucratic corruption.

Suggested Citation

  • 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.
    • Handle: RePEc:men:wpaper:13_2011
    as

    Download full text from publisher

    File URL: http://ftp.mendelu.cz/RePEc/men/wpaper/13_2011.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Martin C. McGuire & Mancur Olson, 1998. "The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use of Force," International Economic Association Series, in: Silvio Borner & Martin Paldam (ed.), The Political Dimension of Economic Growth, chapter 3, pages 38-73, Palgrave Macmillan.
    2. Lambsdorff, Johann Graf, 2002. "Corruption and Rent-Seeking," Public Choice, Springer, vol. 113(1-2), pages 97-125, October.
    3. Mancur Olson, 1996. "Distinguished Lecture on Economics in Government: Big Bills Left on the Sidewalk: Why Some Nations Are Rich, and Others Poor," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 3-24, Spring.
    4. Tomáš Otáhal, 2007. "Why Is Corruption a Problem of the State?," Prague Economic Papers, Prague University of Economics and Business, vol. 2007(2), pages 165-179.
    5. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
    6. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
    7. Reder, Melvin W, 1975. "Corruption as a Feature of Governmental Organization: Comment," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 607-609, December.
    8. Gordon Tullock, 1996. "Corruption Theory And Practice," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 6-13, July.
    9. Rose-Ackerman, Susan, 1975. "The economics of corruption," Journal of Public Economics, Elsevier, vol. 4(2), pages 187-203, February.
    10. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    11. J. Kornai & E. Maskin & G. Roland, 2004. "Understanding the Soft Budget Constraint," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 11.
    12. Anderson, Gary M & Boettke, Peter J, 1997. "Soviet Venality: A Rent-Seeking Model of the Communist State," Public Choice, Springer, vol. 93(1-2), pages 37-53, October.
    13. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 2008. "Why Is Rent-Seeking So Costly to Growth?," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 213-218, Springer.
    14. Andrei Shleifer & Robert Vishny, 1992. "Pervasive Shortages under Socialism," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 237-246, Summer.
    15. Richard A. Posner, 1974. "Theories of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 335-358, Autumn.
    16. Bowles, Roger & Garoupa, Nuno, 1997. "Casual police corruption and the economics of crime," International Review of Law and Economics, Elsevier, vol. 17(1), pages 75-87, March.
    17. Banfield, Edward C, 1975. "Corruption as a Feature of Governmental Organization," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 587-605, December.
    18. 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.
    19. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    20. Arvind K. Jain, 2001. "Corruption: A Review," Journal of Economic Surveys, Wiley Blackwell, vol. 15(1), pages 71-121, February.
    21. Levy, David M, 1990. "The Bias in Centrally Planned Prices," Public Choice, Springer, vol. 67(3), pages 213-226, December.
    22. Schwarz Jiri, 2001. "Deregulation vs. Re-regulation," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 11(4), pages 1-18, December.
    23. Cull, Robert & Matesova, Jana & Shirley, Mary, 2002. "Ownership and the Temptation to Loot: Evidence from Privatized Firms in the Czech Republic," Journal of Comparative Economics, Elsevier, vol. 30(1), pages 1-24, March.
    24. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 995-1025.
    25. Rottenberg, Simon, 1975. "Corruption as a Feature of Governmental Organization: Comment," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 611-615, December.
    26. Olson, Mancur, 1993. "Dictatorship, Democracy, and Development," American Political Science Review, Cambridge University Press, vol. 87(3), pages 567-576, September.
    27. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    Full references (including those not matched with items on IDEAS)

    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. Toke S. Aidt, 2016. "Rent seeking and the economics of corruption," Constitutional Political Economy, Springer, vol. 27(2), pages 142-157, June.
    2. Nicolas Jacquemet, 2005. "La corruption comme une imbrication de contrats : Une revue de la littérature microéconomique," Working Papers 2005-29, Center for Research in Economics and Statistics.
    3. 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.
    4. Liu, Tingting & Liu, Yu & Ullah, Barkat & Wei, Zuobao & Xu, Lixin Colin, 2021. "The dark side of transparency in developing countries: The link between financial reporting practices and corruption," Journal of Corporate Finance, Elsevier, vol. 66(C).
    5. Shuanglin Lin & Wei Zhang, 2009. "The effect of corruption on capital accumulation," Journal of Economics, Springer, vol. 97(1), pages 67-93, May.
    6. Clarke, George R. G. & Xu, Lixin Colin, 2004. "Privatization, competition, and corruption: how characteristics of bribe takers and payers affect bribes to utilities," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2067-2097, August.
    7. Du, Qingjie & Heo, Yuna, 2022. "Political corruption, Dodd–Frank whistleblowing, and corporate investment," Journal of Corporate Finance, Elsevier, vol. 73(C).
    8. Peter J. Boettke & Rosolino A. Candela, 2020. "Productive specialization, peaceful cooperation and the problem of the predatory state: lessons from comparative historical political economy," Public Choice, Springer, vol. 182(3), pages 331-352, March.
    9. Tomáš Otáhal, 2014. "Mises, Hayek and Corruption," Journal of Business Ethics, Springer, vol. 119(3), pages 399-404, February.
    10. Chi, Wei & Wang, Yijiang, 2008. "Bribe-Taking by Bureaucrats: Personal and Circumstantial Determinants," MPRA Paper 8668, University Library of Munich, Germany.
    11. Hella Engerer, 1998. "Ursachen, Folgen und Bekämpfung von Korruption: liefern ökonomische Ansätze bestechende Argumente?," Discussion Papers of DIW Berlin 161, DIW Berlin, German Institute for Economic Research.
    12. Romero-Martínez, Ana M. & García-Muiña, Fernando E., 2021. "Digitalization level, corruptive practices, and location choice in the hotel industry," Journal of Business Research, Elsevier, vol. 136(C), pages 176-185.
    13. Congleton, Roger D. & Lee, Sanghack, 2009. "Efficient mercantilism? Revenue-maximizing monopoly policies as Ramsey taxation," European Journal of Political Economy, Elsevier, vol. 25(1), pages 102-114, March.
    14. Fred S. McChesney, 2010. "The Economic Analysis of Corruption," Chapters, in: Bruce L. Benson & Paul R. Zimmerman (ed.), Handbook on the Economics of Crime, chapter 9, Edward Elgar Publishing.
    15. Frédéric Boehm, 2005. "Corrupción y captura en la regulación de los servicios públicos," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 7(13), pages 245-263, July-Dece.
    16. Ajit Mishra, 2004. "Corruption: A Review," Dundee Discussion Papers in Economics 170, Economic Studies, University of Dundee.
    17. Jellal, Mohamed, 2014. "Firmes industrielles concurrence et corruption [Industrial firms competition and corruption]," MPRA Paper 57284, University Library of Munich, Germany.
    18. Jacob Wanjala Musila & Simon Pierre Sigué, 2010. "Corruption and International Trade: An Empirical Investigation of African Countries," The World Economy, Wiley Blackwell, vol. 33(1), pages 129-146, January.
    19. Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2009. "Why is corruption less harmful in some countries than in others?," Journal of Economic Behavior & Organization, Elsevier, vol. 72(3), pages 797-810, December.
    20. Lurdes Martins & Jorge Cerdeira & Aurora A.C. Teixeira, 2020. "Does corruption boost or harm firms’ performance in developing and emerging economies? A firm‐level study," The World Economy, Wiley Blackwell, vol. 43(8), pages 2119-2152, August.

    More about this item

    Keywords

    Bureaucracy; corruption; economic efficiency; Chicago Public Choice; Virginia Public Choice; rent-seeking; rule of law;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:men:wpaper:13_2011. 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: Luděk Kouba (email available below). General contact details of provider: https://edirc.repec.org/data/femencz.html .

    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.