Economics of corruption

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Economics of corruption applies economic tools to the analysis of corruption. Rigorous study of corruption by economists commenced in the 1980s.

History of the discipline[edit]

In 1968, Nobel laureate economist Gunnar Myrdal found corruption 'almost a taboo (among economists) as research topic'. Indeed it has mostly been a matter of political science and sociology. However, the scenario changed since the 1970s. Since Rose-Ackerman's article "The Economics of Corruption", published in the Journal of Public Economics in 1975,[1] more than 3,000 articles have been written with 'corruption' in the title, at least 500 of which directly focus on different aspects relating to corruption using an economic framework.[2] Some books have also been published on the subject.[3]

Organizations have emerged to deal with the economics of corruption.[4] Some universities offer courses under the title Economics of Corruption.[5] Nobel laureate economist Gary Becker and an American Judge Richard Posner have opened a blog for open public discussion discussing economics of corruption [6]

Books on economics of corruption[edit]

Some books have been produced with the specific title of "economics of corruption". One of these is The Economics of Corruption edited by Ajit Mishra published by the Oxford University Press in 2005. This book is an anthology of 11 essays under 4 categories, written by 16 economists. The titles of the essays give an idea of the various approaches taken by different economists. They are quoted below :

  • Corruption : an Overview
  • Corruption : Its causes and Effects
  • Hierarchies and Bureaucracies: On the role of Collusion in Organizations
  • A Theory of Misgovernance
  • Pervasive Shortages under Socialism
  • Corruption and Growth
  • Corruptible Law Enforcers : How should they be compensated?
  • Notes on bribery and control of corruption
  • The Choice between Market failures and corruption
  • Rents, Competition and corruption
  • Electoral competition and Special Interest Politics

One can observe that the essays do not capture corruption in all its economic essence. Hundreds of essays have been published during the last two decades that deal with many more aspects of corruption from an economic perspective. Some other books are :

  • Rose-Ackerman, S. : Corruption - A study in Political Economy, 1978, Academic Press, New York.
  • Ekpo, M. U. (ed.) : Bureaucratic corruption in sub-Saharan Africa, 1979, University Press of America, Washington.
  • Noonan, J. T. Bribes, 1984, Macmillan, New York.
  • Chowdhury, F. L. Corrupt Bureaucracy and Privatization of Tax Enforcement, 2006, Pathak Samabesh, Dhaka.

Courses on economics of corruption[edit]

Some universities and institutions including the University of Regina in Canada, Florida State University in the United States and the University of Passau in Germany have started to offer courses on economics of corruption.[7] One of the course outline is given below. The course is offered by New Economic School, an institution in Russia.[8] The course includes 14 lectures, the themes of which are as follows.

  • 1. Corruption as an economic, social and political problem. Corruption's specific features in economies in transition.
  • 2. Corruption and rent-seeking behavior. Basic model of rent-seeking and its research. Problem of rent's dissipation.
  • 3. Static and dynamic models of Rent-seeking. Cases of pure and mixed public goods.
  • 4. Rent-seeking behavior and free-riding. Rent-seeking in teams.
  • 5. Rent-seeking in hierarchical systems.
  • 6. "Artificial" rents and seeking for them.
  • 7. Examples when rent-seeking arises in economies. Criminal rent-seeking.
  • 8. Basil model of corruption and its analysis. Corruption models' classification.
  • 9. Game-theoretical approaches towards corruption.
  • 10. Corruption in hierarchical structures.
  • 11. Dynamic corruption models.
  • 12. Economic systems with corruption efficiency.
  • 13. Statistical and econometrical approaches towards research of corruption.
  • 14. Macroeconomics aspects of corruption. Problems in estimation of corruption influence on economic development.

Evidently, the course has limited focus and in many ways do not directly address relevant areas of corruption which have already been analyzed from an economic perspective.

Approaches to economic analyses of corruption[edit]

As indicated above, a systematic pattern in research on corruption from economic perspective is yet to emerge. However, Ananish Chaudhuri has classified the foci of economic analyses of corruption into fourteen broad categories.[9] These are:

  • Economic causes of corruption
  • Rent-seeking in the public offices, including Judiciary
  • Corruption as an economic behavior, e.g. game theoretic explanation
  • Demand for and Supply of corruption, optimal level of corruption, optimal level of bribery, efficiency of the market in corruption
  • Impact of corruption on the competitiveness in the market for goods and services
  • Measurement of the level of corruption, comparative county-studies
  • Corruption in different economic activities, e.g. public procurement, defense procurement
  • Sources of corruption: Revenue collection, Foreign aid, Foreign Direct Investment
  • Corruption in the private sector, Economies in transition
  • Impact of corruption on economic growth, national development and the level of poverty
  • Welfare impact of corruption, Income redistribution resulting from corruption
  • Factors affecting corruption, e.g. Shadow economy, Smuggling, weak state, corruption by politicians
  • Relation between corruption on the one hand and other economic-social-cultural aspects like technological progress, environment and ecology,
  • Economic factors relating to anti-corruption programs, e.g. optimal level of punishment for corruption etc.

References[edit]

  1. ^ Rose-Ackerman S. : "The Economics of Corruption", Journal of Political Economy, Vol. IV, 1975, pp. 187-203.
  2. ^ JSTOR search on 8 March 2008
  3. ^ The Economics of Corruption, edited by Ajit Mishra, 2005 : Oxford University Press
  4. ^ Internet Centre for Corruption Research
  5. ^ Economics of Corruption 2008
  6. ^ The Becker-Posner Blog
  7. ^ University of Passau, Germany
  8. ^ Economics of Corruption
  9. ^ Faizul Latif Chowdhury, "Economic Approaches in Corruption Studies", Fiscal Frontiers, 2008, Dhaka.