Corruption and Policy: Back to the Roots

13 Pages Posted: 19 Jun 2002

See all articles by Harry G. Broadman

Harry G. Broadman

World Bank - Europe and Central Asia Region

Francesca Recanatini

World Bank - Global Governance Group; World Bank Institute

Abstract

Corruption is now recognized to be a pervasive phenomenon that can seriously jeopardize the best-intentioned reform efforts. Economists in the field of industrial organization, antitrust and regulation have long recognized certain institutional factors as potent determinants of corruption, opportunistic behavior and "capture" of government officials. Only now are these relationships becoming conventional wisdom among specialists of economies in transition. This paper presents an analytical framework for examining the role basic market institutions play in rent-seeking and illicit behavior. Using data only recently available on the incidence of corruption and institutional development across an array of transition economies, the paper provides preliminary evidence on the link between the development of market institutions and incentives for corruption. The empirical results suggest that high barriers to new business entry and soft budget constraints on incumbent firms are particularly important institutional factors engendering opportunities for corruption. The findings also support the notion that economic development and maturation of democratic processes both temper corruption, as does, to a lesser extent, openness to international trade.

Suggested Citation

Broadman, Harry G. and Recanatini, Francesca, Corruption and Policy: Back to the Roots. Journal of Policy Reform, Vol. 5, Pp. 37-49, 2002, Available at SSRN: https://ssrn.com/abstract=316559

Harry G. Broadman (Contact Author)

World Bank - Europe and Central Asia Region ( email )

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Washington, DC 20433
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202-473-1312 (Phone)
202-522-2753 (Fax)

Francesca Recanatini

World Bank - Global Governance Group ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
202-473-1557 (Phone)

World Bank Institute ( email )

1818 H Street
Washington, DC 20433
United States
202-473-1557 (Phone)

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