Corruption, Institutional Trust, and Legitimacy: A Vicious Circle

Abstract

This paper argues that even if elites or reformers are willing to put anticorruption laws in place, the legacy of corruption and mistrust may render them ineffective. We begin by discussing the importance of trust and the literature that has shown that corruption has a significant effect on citizens’ trust in the institutions of the state. Predatory and rent seeking agents generate a dim view of the trustworthiness of the state and other institutions of governance. We then discuss the role of trust and corruption in shaping compliance and argue that a legitimacy effect is a plausible mechanism driving these relationships. We then draw on work that shows that corruption undermines legitimacy - a property of a law or policy that enhances compliance even when the probability of punishment is low. Therefore, even when reformers put meaningful anti-corruption policies in place, their efficacy is likely to be low as the legacy or perception of corruption leads to low levels of compliance, resulting in a vicious cycle of corruption. While leadership may be endogenous, breaking out of the legitimacy trap requires top-level leaders to show a zero-tolerance for corruption and to understand that “actions speak louder than policies”.

Keywords: Corruption, Trust, Institutions, Legitimacy