INSTABILITY AND THE INCENTIVES FOR CORRUPTION
We investigate the relationship between corruption and political stability, from both theoretical and empirical perspectives. We propose a model of incumbent behavior that features the interplay of two effects: a horizon effect, whereby greater instability leads the incumbent to embezzle more during...
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Published in | Economics and politics Vol. 21; no. 1; pp. 42 - 92 |
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Main Authors | , , |
Format | Journal Article |
Language | English |
Published |
Oxford, UK
Blackwell Publishing Ltd
01.03.2009
Wiley |
Subjects | |
Online Access | Get full text |
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Summary: | We investigate the relationship between corruption and political stability, from both theoretical and empirical perspectives. We propose a model of incumbent behavior that features the interplay of two effects: a horizon effect, whereby greater instability leads the incumbent to embezzle more during his short window of opportunity, and a demand effect, by which the private sector is more willing to bribe stable incumbents. The horizon effect dominates at low levels of stability, because firms are unwilling to pay high bribes and unstable incumbents have strong incentives to embezzle, whereas the demand effect gains salience in more stable regimes. Together, these two effects generate a non‐monotonic, U‐shaped relationship between total corruption and stability. On the empirical side, we find a robust U‐shaped pattern between country indices of corruption perception and various measures of incumbent stability, including historically observed average tenures of chief executives and governing parties: regimes that are very stable or very unstable display higher levels of corruption when compared with those in an intermediate range of stability. These results suggest that minimizing corruption may require an electoral system that features some re‐election incentives, but with an eventual term limit. |
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Bibliography: | ArticleID:ECPO335 ark:/67375/WNG-8F9Q2HBT-K istex:10F52BCD20F324EEFBE17AC32E124AD970E41F3B ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23 ObjectType-Article-1 ObjectType-Feature-2 |
ISSN: | 0954-1985 1468-0343 |
DOI: | 10.1111/j.1468-0343.2008.00335.x |