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Why is Corruption Less Harmful in Some Countries Than in Others?

[journal article]

Blackburn, Keith; Forgues-Puccio, Gonzalo F.

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Please use the following Persistent Identifier (PID) to cite this document:http://nbn-resolving.de/urn:nbn:de:0168-ssoar-314946

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Abstract Empirical evidence shows that not all countries with high levels of corruption have suffered poor growth performance. Bad quality governance has clearly been much less damaging (if at all) in some economies than in others. Why this is so is a question that has largely been ignored, and the intention of this paper is to provide an answer. We develop a dynamic general equilibrium model in which growth occurs endogenously through the invention of new goods based on re- search and development activity. For such activity to be undertaken, firms must acquire complementary licenses from public officials who are able to exploit their monopoly power by demanding bribes in ex- change for these (otherwise free) permits. We show that the effects of corruption depend on the extent to which bureaucrats coordinate their rent-seeking behaviour. Specifically, our analysis predicts that countries with organised corruption networks are likely to display lower levels of bribes, higher levels of research activity and higher rates of growth than countries with disorganised corruption arrangements.
Keywords innovation
Classification Criminal Sociology, Sociology of Law
Free Keywords Organised corruption; disorganised corruption; growth
Document language English
Publication Year 2009
Page/Pages p. 797-810
Journal Journal of Economic Behavior & Organization, 72 (2009) 3
DOI http://dx.doi.org/10.1016/j.jebo.2009.08.009
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)