Public Expenditures, Bureaucratic Corruption and Economic Development

24 Pages Posted: 21 Apr 2011

See all articles by Keith Blackburn

Keith Blackburn

University of Manchester - School of Social Sciences

Niloy Bose

University of Wisconsin at Milwaukee - Department of Economics; Virginia Polytechnic Institute & State University - Department of Economics

M. Emranul Haque

University of Manchester - School of Social Sciences

Date Written: June 2011

Abstract

We present a dynamic general equilibrium analysis of public sector corruption and economic growth. In an economy with government intervention and capital accumulation, state-appointed bureaucrats are responsibile for procuring public goods which contribute to productive efficiency. Corruption arises because of an opportunity for bureaucrats to appropriate public funds by misinforming the government about the cost and quality of public goods provision. The incentive for each bureaucrat to do this depends on economy-wide outcomes which, in turn, depend on the behaviour of all bureaucrats. We establish the existence of multiple development regimes, together with the possibility of multiple, frequency-dependent equilibria. The predictions of our analysis accord strongly with recent empirical evidence.

Suggested Citation

Blackburn, Keith and Bose, Niloy and Haque, M. Emranul, Public Expenditures, Bureaucratic Corruption and Economic Development (June 2011). The Manchester School, Vol. 79, Issue 3, pp. 405-428, 2011, Available at SSRN: https://ssrn.com/abstract=1817149 or http://dx.doi.org/10.1111/j.1467-9957.2009.02168.x

Keith Blackburn (Contact Author)

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Niloy Bose

University of Wisconsin at Milwaukee - Department of Economics ( email )

Bolton Hall
Milwaukee, WI 53211
United States
414-229-6132 (Phone)

HOME PAGE: http://www.uwm.edu/Dept/Economics/faculty/bose.html

Virginia Polytechnic Institute & State University - Department of Economics ( email )

3021 Pamplin Hall
Blacksburg, VA 24061
United States

M. Emranul Haque

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom
+0161 275 4829 (Phone)

HOME PAGE: http://www.socialsciences.manchester.ac.uk/disciplines/economics/about/staff/

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