Harassment, corruption and tax policy: reply

Saha [Eur. J. Polit. Econ. (2003)] has raised some points about our paper [Eur. J. Polit. Econ. 16 (2000) 75]. We herewith reply to these points.     

Corruption and public spending on education and health

Existing country and regional studies show that the effect of corruption on public spending on health and education is mixed. This letter reveals that the effect of corruption on health and education spending is significant and non-linear in a panel of 134 countries observed over two decades: For an overwhelming majority of countries, corruption has a positive effect on the share of public resources spent on public health and a negative effect in the case of education. The results presented are robust to several econometric challenges ignored in the literature.     

Responsible cronyism in transition: understanding changing attitudes to business corruption in Myanmar

ABSTRACT

Existing research on corruption in Asian business has focused on issues of causation, manifestation and impact, but with little attention paid to how corrupt practices evolve over time. Despite two decades of empirical evidence of changing work values among Asian managers, we know little as to how, why and to what extent this affects their corollary attitudes and behaviours towards corruption. Focusing on ‘responsible’ cronyism – as indicative of pressures to adapt current crony practices – we pursue an interview-based investigation in the emerging economy of Myanmar. Findings uncovered significant heterogeneity in participant perspectives towards responsible cronyism, seen variously as a West-East hybrid progression, a reversion to traditional Burmese values and an instrumental negotiation tool. Implications for how we understand changing attitudes to corruption in Myanmar (and emerging Asia) for both theory and practice, along with future research directions are discussed.     

Corruption,illegal trade and compliance with the Montreal Protocol

This paper studies the effects of corruption, rule of law and tariffs on illegal trade in chlorofluorocarbons (CFCs) controlled by the Montreal Protocol. Since data on illegal trade is not available, it is not possible to test any theoretical conclusions about smuggling. The paper, however, attempts to circumvent the problem by developing a model of illegal trade in CFCs that derives predictions about the effects of corruption, rule of law and tariffs on both legal and illegal imports of CFCs. Then the theoretical predictions concerning legal imports are tested using panel data on CFC consumption. Using the estimates of legal imports, inferences about illegal trade are made. The basic findings indicate that knowledge about the degree of rule of law, corruption and the level of tariffs is needed for the correct interpretation of the data on environmental performance reported to international monitoring agencies.     

Socio-economic typologies of bureaucratic corruption and implications

Corruption all over the world is an ancient, but it seems very topical too, concern in politics and in the media. This paper investigates spatial and dynamic aspects of corruption using cellular automata. Although cellular automata are very simple, deterministic machines and thus crude approximations of real, economic situations, they are capable of describing self organization and complex patterns (of corruption). It is shown that neither social pressure nor pure economic incentives allow for complex patterns, although social pressure may lead to clusters of corrupt and uncorrupt segments within a bureaucracy. However, blending both above characteristics is capable explaining complex behavior. Extending the concept of cellular automata through mixing rules – across space (= bureaucrats) and time (accounting for global effects) – does not affect the fundamental properties.     

Indonesian economic development: Mirage or miracle?

This paper focuses on a few major developments that took place during the three decades from the late 1960s to the Asian financial crisis. The study finds, in retrospect, that many of the Indonesian economy’s weaknesses—now so glaringly apparent—were there all the time. The paper concludes that the Indonesian banking crisis was primarily domestic in nature, more so than the crises in Korea and Thailand. The extent of the failure was much more widespread and probably resulted from a chain of bank runs and bank closings, reinforced by uncertainty and lack of faith in the government’s commitment to the IMF program and IMF fumbling.     

Measuring the Effect of Corruption on Sovereign Bond Ratings

Abstract

Instrumenting for sovereign corruption, we find that Transparency International’s Corruption Perceptions Index which ‘ranges from 10 (highly clean) to 0 (highly corrupt)’, is a significant predictor of the Standard and Poor’s sovereign bond ratings ranging from 1 (Sovereign Default) to 22 (AAA) in panel data from 52 countries from 1993 to 2002. Corruption downgrades the creditworthiness of sovereign bonds by diverting loan proceeds from productive projects to less productive ones, if not to offshore accounts. In particular, a one point worsening of the corruption perception index leads to an estimated one‐notch reduction out of 22 in the sovereign bond rating.     

Measuring and combating corruption

Corruption thrives on misinformation and secrecy. In the Global Corruption Report 2003 , Transparency International ( TI ) puts access to information at the top of its agenda. TI catalogues a climate of mistrust that is working against the interests of shareholders and employees in the market economy, and against the interests of the developing world when economic and business decisions are taken on the basis of the size of a kickback rather than quality, competence and value for money. A sustainable and prosperous society requires a national integrity system based on the rule of law, checks and balances, and a thriving independent media and civil society.     

基于入门费的腐败行为与金融制度研究

从世界范围内看,高腐败发生率客观存在是不争的事实。下级官员为获得有利可图的职位,而向上级官员缴纳入门费。而入门费的筹集方式的选择,作为腐败过程的一个重要环节,涉及到金融制度问题。金融制度与腐败收益率及其在不同相关利益群体之间的利益分割存在紧密联系。金融机构的存在以及审查监督的有效性,因为可以改变公共部门的租金分配,而可以降低腐败水平。     

Corruption and Policy: Back to the Roots

Corruption is now recognized to be a pervasive phenomenon that can seriously jeopardize the best-intentioned reform efforts. This paper presents an analytical framework for examining the role basic market institutions play in rent-seeking and illicit behavior. 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.