Corruption and Decentralisation
Dipartimento di Scienze Economiche, Working Paper No. 342/83
40 Pages Posted: 11 Apr 2000
Date Written: March 2000
This paper studies the impact of decentralisation on corruption in a hierarchy, where decentralisation is intended as the delegation of power to lower levels. More decentralisation has a positive impact on corruption, raising individual propensity to accept bribes. It has also a two-fold effect on incentives to monitor corrupt activities by higher levels. It causes a loss in control, reducing their willingness to monitor. It also increases the bribe paid to lower levels, enhancing their propensity to corruption and raising the higher layers' monitoring. When this second effect dominates, decentralisation, although creating agency problems, can help in controlling corruption.
JEL Classification: D23, D73, D82
Suggested Citation: Suggested Citation