Social norms and corruption

We explore theoretically and empirically whether corruption is contagious and whether conditional cooperation matters. We argue that the decision to bribe bureaucrats depends on the frequency of corruption within a society. We provide a behavioral model to explain this conduct: engaging in corruption results in a disutility of guilt. This disutility depends negatively on the number of people engaging in corruption. The empirical section presents evidence using two international panel data data sets, one at the micro and one at the macro level. Results indicate that corruption is influenced by the perceived activities of peers. Moreover, macro level data indicates that past levels of corruption impact current corruption levels

A Typology of Corrupt Transactions in Developing Countries

Summary Economic theory has attempted to identify the conditions under which corruption has particularly harmful effects. This article evaluates these theories and argues that the classifications offered are misleading. Very successful interventionist states have suffered from corruption just as much as very unsuccessful ones. Policy responses to corruption require an understanding of the effects of corruption and the determinants of these effects. The fact which appears to have a strong effect in determining the harmfulness of corruption is the balance of power between the state and its clients. An alternative classification of the effects of corruption is suggested on this basis

Determinants of Corruption in Developing Countries: the Limits of Conventional Economic Analysis

Corruption takes place when public officials break the law in pursuit of their private interest. But public officials can break different laws in different ways with different implications for the public good. The factors driving corruption and the effects of corruption can therefore vary widely. Understanding the causes and consequences of corruption is particularly important in developing countries, which almost without exception suffer from high levels of corruption. The virtual uniformity of this evidence strongly suggests that developing countries must share some powerful common drivers of corruption that are different from those that affect advanced industrial countries. At the same time, the very diverse economic performance of developing countries suggests that not all developing countries suffer from the same types of corruption. These two observations, summarized in our first section, provide the backdrop to my analytical investigation. I begin this investigation by identifying the drivers of corruption implicit in most conventional neoclassical economic analysis of the topic. Although these drivers are undoubtedly important in many contexts, I next argue that a number of other drivers of corruption may be mor

Misunderstanding corruption and community: comparative cultural politics of corruption regulation in the Pacific

This paper will take as its empirical foundation the author’s experience of corruption and regulation in small Pacific island states. The argument is that notions of corruption and strategies for its regulation suitable for modernized societies, which lack cultural specificity and community engagement, may in fact stimulate corruption relationships in transitional cultures. The other consequence of the imposition of inappropriate definitions and regulation strategies is a profound misunderstanding of communities of dependence. In fact, corruption control can misconstrue and exacerbate economic and political dependence environments, fostering the conditions for corruption which accompany socio-economic development. Two remedies are suggested. First, corruption requires an appreciation which is ‘community-centered’, while at the same time not being neutralized by disconnected cultural relativity. Second, an enterprise theory of corruption in modernized societies and international political/commercial entities may assist in the relevant translation of global anti-corruption policies in a way which advances good governance in traditional communities. This is so when corruption is conceived as dependant on phases of modernization, and the tensions which arise when the interests of societies at different phases intersect. Corporate citizenship and compliance with anti-corrupt business practices by major corporations with a commercial interest in these transitional economies may be more beneficial than deference to uniform international codes of governance

Profiling Corruption Perception in Africa: the Role of Religion, Gender, Education and Age

This study investigates attitude towards corruption and the role of gender, religion, education and age using a Nigerian survey data. It also seeks to establish how attitudes towards corruption relates to some other reported ethical measures such as Islamic work ethics, money ethic and corruption perception. Over 3800 questionnaires were administered with 1833 or about 48% response rate. Results revealed no significant gender differences in corruption but women reported being more religious. Also Christians rated the incidence of corruption as higher than Muslims although the sample size skews significantly in favour of the former. Older and more educated people also rated corruption incidence higher

Corruption and firm behavior

This paper investigates how corruption affects firrm behavior. Firms can engage in two types of corruption when seeking a public service: cost-reducing "collusive" corruption and cost increasing "coercive" corruption. Using an original and unusually rich dataset on bribe payments at ports matched to firrm-level data, we observe how firms respond to each type of corruption by adjusting their shipping and sourcing strategies. "Collusive" corruption is associated with higher usage of the corrupt port, while "coercive" corruption is associated with reduced demand for port services. Our results suggest that firms respond to the opportunities and challenges created by different types of corruption, organizing production in a way that increases or decreases demand for the public service. Understanding how firms respond to corruption has important implications for how we conceptualize, identify and measure the overall impact of corruption on economic activity

The construction of corruption, or rules of separation and illusions of purity in bourgeois societies

George W. Bush and his "coalition of the willing" wage war on the corrupt regime of Saddam Hussein. Islamic fundamentalists deride their national governments as corrupt and, accordingly, have little love for the United States, a patron of many of these regimes. The World Bank has declared that corruption is the single greatest obstacle to global development. The Michigan Militia and similar right-wing populist groups claim that federal institutions, such as the FBI and IRS, are a corruption. Left-leaning critics and reformers such as Michael Moore and Ralph Nader, attack the corruption that presumably plagues American political and economic life. The list could go on and on; it seems that there is hardly any comtemporary political tendency that does not contain some form of anti-corruption agenda. It is striking that so many disparate and competing political discourses all agree that corruption is a problem, oftentimes the problem. Regardless of the interpretive frame (right, left, populist, technocratic, religious, secular, etc.), the specter of corruption is a constant, and is both unavoidable and unquestioned; unquestioned in the sense that the undesirability of corruption is taken as a given, no substantive argument is needed - who is, after all, in favor of corruption? - and unavoidable in that corruption seems to refer to underlying tensions, antagonisms, and traumas that, regardless of one's conceptual toolbox and political tendencies, cannot be ignored or passed over

A Comparative Study of Inequality and Corruption

We argue that income inequality increases the level of corruption through material and normative mechanisms. The wealthy have both greater motivation and opportunity to engage in corruption, while the poor are more vulnerable to extortion and less able to monitor and hold the rich and powerful accountable as inequality increases. Inequality also adversely affects peoples social norms about corruption and beliefs about the legitimacy of rules and institutions, and thereby makes it easier to tolerate corruption as acceptable behavior. Our comparative analysis of 129 countries utilizing two-staged least squares methods with a variety of instrumental variables supports our hypotheses, using different measures of corruption (the World Banks Control of Corruption Index and the Transparency Internationals Corruption Perceptions Index). The explanatory power of inequality is at least as important as conventionally accepted causes of corruption such as economic development. We also find a significant interaction effect between inequality and democracy, and evidence that inequality affects norms and perceptions about corruption, using the World Values Survey data. Since corruption also contributes to income inequality, societies often fall into vicious circles of inequality and corruption.This publication is Hauser Center Working Paper No. 22. The Hauser Center Working Paper Series was launched during the summer of 2000. The Series enables the Hauser Center to share with a broad audience important works-in-progress written by Hauser Center scholars and researchers

Corruption and Cross-Border Investment: Firm-Level Evidence

This paper studies the impact of corruption on inward foreign direct investment using a unique firm-level data set. It examines two effects of corruption simultaneously: a reduction in the volume of foreign investment and a shift in the ownership structure. Corruption makes local bureaucracy less transparent and hence acts as a tax on foreign investors. Moreover, corruption affects the decision to take on a local partner. On the one hand, corruption increases the value of using a local partner to cut through the bureaucratic maze. On the other hand, corruption decreases the effective protection of investor’s intangible assets and lowers the probability that disputes between foreign and domestic partners will be adjudicated fairly, which reduces the value of having a local partner. The importance of protecting intangible assets increases with investor’s technological sophistication, which tilts the preference away from joint ventures in a corrupt country. Empirical evidence shows that corruption reduces inward FDI and shifts the ownership structure towards joint ventures. Technologically more advanced firms are found to be less likely to engage in joint ventures.http://deepblue.lib.umich.edu/bitstream/2027.42/39879/3/wp494.pd

Corrupt and Unequal, Both

Rick Hasen has presented the issue of money in politics as if we have to make a choice: it is either a problem of equality or it is a problem of corruption. Hasen’s long and influential career in this field has been a long and patient struggle to convince those on the corruption side of the fight (we liberals, at least, and, in an important sense, we egalitarians too) to resist the temptation to try to pass—by rendering equality arguments as corruption arguments, and to just come out of the closet. Hasen had famously declared that the corruption argument supporting Austin v. Michigan Chamber of Commerce was a fake and that the only basis for justifying the ban on corporate spending in Austin was equality, not corruption. And the U.S. Supreme Court famously (in our circles at least) agreed, in the process of striking down the ban on corporate spending in Austin and everywhere else. Thus, Hasen argues, it is a fool’s errand to fake the corruption argument. We need instead, Hasen has constantly counseled, a bit of egalitarian pride. Be true to ourselves, Hasen tells us, and give up the pretense of corruption talk