Narrow Results

There is a fundamental conflict of interests between the ruler and most citizens in non-democracies. When the ruler maximizes his benefit from taxation, the major constraint is that citizens might make attempts to overthrow the existing regime. The continuity and stability of regime are crucially related to the degree of support to the existing political regime by the bureaucracy. In this paper, we use a simple model to argue that, when the ruler maximizes his benefit and faces exogenous restriction on wage setting, toleration of corruption is necessary to induce the required support and effort from the bureaucracy. We then relax the exogenous restriction on wages and study the case in which the ruler may eliminate corruption by setting efficiency wage. We also explore the possibility that the ruler may use an audit device to check corruption.

Recent studies in the innovation literature show that Foreign Direct Investment (FDI) enhances innovations in recipient countries through spill-over effects. In this paper we extend the existing literature by incorporating the corruption index in the estimation procedure. Using a cross-country analysis from the Europe and Central Asia (ECA) region, covering 57 countries over the period of 1995–2010, we find no evidence of FDI spill-over effects on innovations, when corruption is endogenously modelled in the regression. Interestingly, we find that corruption and expenditure on education sector are positively related to the number of patents applications, suggesting anti-corruption programs encourage innovations that promote economic growth. Our study shed light on the national innovations and anti-corruption programs.

In theory, trade intensity should positively affect the quality of domestic institutions and governance; the higher the economic openness, the lower the corruption. In practice, however, the growth of economic openness has not been accompanied by the expected improvements in corruption for 34 African countries between 1990 and 2009. This paper presents a plausible explanation for this conundrum. Results from panel data regression analyses indicate that a switch from trading with the Advanced Economies to trading with China increases the perceived corruption level. For instance, in a “representative” African country, a 10% point substitution from trading with the Advanced Economies to trading with China makes its ICRG corruption score decline—indicating increased corruption—by 29%.

This paper modeled the effect of corruption on growth, using Nigerian data for testing. The productivity growth channel of corruption was explored. Cointegration and error correction methods were employed in the analysis. The national system of innovations and corruption exhibited long run relations with productivity growth and were found to be credible fundamentals. The productivity growth vector was considered to be the only plausible in the long run growth analysis. The parsimonious growth equation showed productivity growth and government expenditure as significant and conformed to a priori expectations. The course of policy to sustainable growth was suggestive.

Employing annual data over the period 1996–2013 for 29 OECD countries, this paper explores the impact of corruption on domestic innovative activity, measured by the number of patent and trademark applications, via a linear panel fixed effect model and a nonlinear panel smooth transition regression with all lagged explanatory variables as instrumental variables and under the consideration of potential endogeneity biases. The results indicate several important findings. First, there exists a strong threshold effect between the control of corruption and levels of innovative activity across nations. Second, we note that corruption only has a substantial positive impact on innovation when it is over the threshold level, but not when a country has a seriously corrupt government with low bureaucratic quality, no matter for patent or trademark applications. Hence, heterogeneous beliefs about low transition speed show that OECD countries may not take actions instantly and identically to pursue better bureaucratic quality. Finally, we discover that an improvement over corruption presents greater impacts on patent applications than on trademark applications. Taken together, we confirm that corruption plays a fundamental role in determining innovation activities in OECD countries, offering meaningful policy implications for those policymakers and industries in accordance with our findings.

Using World Bank Enterprise Survey data on bribery and patent applications, we try to study the causal linkage between firm level innovation and corruption in India. Specifically, we try to understand if corruption impacts innovation at the firm level. Since we find that innovation and corruption are jointly determined, we propose instrumental variables regression approach to identify this causal effect. We instrument bribery by exogenously determined external audit parameter and then use a recursive bivariate probit model combined with industry-fixed effects to reach our results. Our findings suggest that bribery has an adverse impact on innovation. The results of our study are much in contrast to the existing literature, which largely supports a positive relationship between innovation and corruption.

The aim of this paper is to explore the relationship between intelligence and economic and financial crimes. For this purpose, we use a cross-sectional sample of 182 countries for the time span of 2012–2017. Our research provides empirical evidence on the existence of a significant impact of intelligence upon economic and financial crimes. When we analyze the entire sample, we find that intelligent people are more prone to comply with the law and thus increase the efficiency of implementing government policies to reduce economic and financial crimes. However, when we conduct our analysis among the two subgroups of high- and low-income countries, different results are obtained. For high-income countries, we obtain evidence of a positive coefficient for the impact of intelligence on economic and financial crimes, meaning that increased intellectual capacities of people from these countries, including high professional knowledge and skills, are used to break the traditional technology in order to get illegal benefits. Our results conducted for the low-income countries' subsample do not support intelligence as being a determining factor for economic and financial crimes; in these countries, other determinants are more important for engaging in such activities. Our study may have important implications for the policymakers who must acknowledge that various policies in the field of economic and financial crimes need to be differentially adopted depending on the level of development of each country, which offers different ways of involvement in such crimes, related to the level of people's intelligence.

The importance of cooperation is self-evident to humans, yet the existence of corruption where law violators can avoid being punished by paying bribes to corrupt law enforcers may threaten the maintenance of cooperation. Although powerful monitoring has been used to resolve such matters, existing studies show that the effects of such measures are either transient or uncertain. Thus how to efficiently control the occurrence of corruption for the emergence of cooperation remains a challenge. Here, we introduce social exclusion into the public goods game, and respectively propose three measures to control corruption, namely, the exclusion of corrupt punishers, the exclusion of corrupt defectors, and the exclusion of both corrupt punishers and corrupt defectors. Our results show that the system dynamics driven by these three measures can exhibit many interesting dynamical outcomes including the dominance of defectors, rock-scissors-paper cycle, heteroclinic cycle, or interior attractor. We further demonstrate that excluding corrupt punishers can improve the situation of corruption more efficiently than excluding corrupt defectors. In addition, excluding both corrupt defectors and corrupt punishers can more effectively promote the emergence of cooperation for a broad parameter range.

We review the literature on foreign direct investment (FDI) and provide an empirical analysis of factors affecting FDI. Conjectures of the disparity of FDI between the coastal and western regions of China and policy recommendations are also made.

Synopsis

The research problem

This study examines the association between corruption culture and corporate social responsibility (CSR) decoupling.

Motivation

Only a handful of studies have examined the effect of local culture on organizational outcomes. Recent studies shed light on the factors contributing to CSR decoupling, highlighting the value of understanding this disparity; however, few studies have documented the role of societal factors that contribute to this gap. Our study seeks to fill this gap by documenting that corruption culture increases dishonest behavior, reduces social stigma and the likelihood of punishment, promotes managerial rent-seeking, and ultimately affects CSR decoupling.

The hypothesis

Corruption culture is associated with higher CSR decoupling.

Target population

We used a sample of Chinese A-listed firms from 2010 to 2020.

Adopted methodology

We used ordinary least squares, path analysis, two-stage least square (2SLS) regression, generalized method of moment (GMM), and multiperiod difference in difference.

Analyses

By using 5,428 firm–year observations, this study examined the association between corruption culture and CSR decoupling. We employed robustness and mechanism tests to corroborate the findings and proposed mechanisms. Finally, we conducted heterogeneity tests to assess the varied impact of corporate governance, state ownership, and CEO attributes on the relationship between corruption culture and CSR decoupling.

Findings

We documented a positive relationship between corruption culture and CSR decoupling. We also found a less pronounced effect of corruption on CSR decoupling among firms with extensive media coverage and investments from qualified foreign institutional investors. Furthermore, the effect of corruption on CSR decoupling was particularly pronounced for private firms. We also observed that the effect of a corruption culture was especially weak for firms with chief executive officers who have international experience, are nonpolitically connected, and are female.

This paper examines causes and consequences of corruption within the process of economic development. Drawing on experiences and insights accumulated during the post-war period and reflected in a growing body of academic research, the paper analyzes institutional mechanisms that sustain corruption and the impact of corruption on development. It argues that many forms of corruption stem from the distributional attributes of the state in its role as the economy's central agent of resource allocation. It also addresses the question of what can be done about corruption and discusses the role of economic policies in developing incentives and institutions to reduce its incidence.

This paper re-studies the relationship between trade openness and environmental pollution. Through the theoretical framework, there is a non-uniform effect of trade openness on environmental pollution. Utilizing four alternative measures of trade openness as threshold variables, this paper examines the effect of trade openness on environmental pollution. We adopt a regression with nonlinearity, in which our nonlinear model includes two regressions — a threshold model and an interaction-term model. Utilizing four alternative measures of trade openness, our threshold test shows a single-threshold effect on pollutant emissions, implying that there are two regimes: low- and high-corruption. Our empirical results show that for countries with high-corruption, increases in trade openness significantly reduce pollutants emissions whatever CO₂ emissions or SO₂ emissions, and the larger effects of trade openness on environmental quality. However, the impact of trade openness on pollution was not found in countries with low-corruption. This study suggests that further trade openness and reduced environmental degradation (i.e., decline in CO₂ and SO₂ emissions) are compatible rather than competing objectives, especially in high-corruption countries. Furthermore, our results also show that in low-corruption countries, the negative effects of income on CO₂ emissions are statistically significant, but in high-corruption countries it is not so.

In this research, I study the relationship between bilateral Foreign Direct Investment (FDI) and difference in corruption between source and host countries. Using instrumental variables (IVs) approach, the results suggest that bilateral FDI between two countries might increase if the difference in corruption between them decreases. In addition, I find that firms from corrupt countries tend to invest abroad to exploit natural resources while those from less corrupt countries take advantage of relatively low local wages and open trade policies.

In the closing decades of the twentieth century, there has been an almost complete intellectual triumph of the twin principles of marketization (understood here as referring to the liberalization of domestic markets and freer international mobility of goods, services, financial capital and perhaps more arguably, labour) and democratization. A paradigm shift of this extent and magnitude would not have occurred in the absence of some broad consensus among policymakers and (sections of) intellectuals around the globe on the desirability of such a change. There seems to be a two-fold causal nexus between marketization and democracy. The first is more direct, stemming from the fact of both systems sharing certain common values and attitudes. But there is also a second more indirect chain from marketization to democracy, which is predicated via three sub-chains (i) from marketization to growth, (ii) from growth to overall material development welfare and (iii) from material development to social welfare and democracy. We examine each of these sub-links in detail with a view to obtaining a greater understanding of the hypothesized role of free markets in promoting democracies. In the later part of the paper, we examine the socio-economic outcomes governing the quality of democracy in a specifically Indian context.

Corruption is widespread in Bangladesh. According to a report of the international watchdog Transparency International, during 2001–2005, Bangladesh was the most corrupt country in the world. How to combat corruption in Bangladesh is now an important agenda for both international donor agencies and the government. Using game theory, this paper proposes that a successful reduction in corruption to a tolerable level in the government sector depends on a reduction in both incentives to and opportunities for corruption by government employees, and this can be done by raising salaries and introducing strong punishment simultaneously. To introduce an effective and strong punishment system, independent, and strong anti-corruption bodies and strong commitment from political leaders are the essential conditions.

This paper investigates the influences of global economic sanctions on corruption by using the structural gravity model for 148 sanctioned countries (108 developing countries and 40 developed countries) during the 1995–2018 period. We consider various forms of sanction, including arms, military, trade, finance, travel, and others. The results reveal that the imposition of sanctions, especially arm, financial, travel, and other sanctions have a significantly negative effect on the prevalence of corruption of target countries. The effects are also largely heterogeneous across sanctioned countries in terms of their economic development. Furthermore, the properties of the institutional quality of the sanctioned state critically affect the relationship between global sanctions and national corruption. Particularly, the well-developed institutional quality helps target countries address the consequences of global sanctions on national corruption. The empirical findings of this study are expected to provide vital insightful lessons for economists and policymakers in the target countries in combating the corruption pervasiveness.

This study examines the effects of corruption and political instability and violence on the financial sector development. We estimate the impact for a panel of countries classified by income groups and regulatory quality. The study considers the period from 1996 to 2015 for analysis. The empirical models of this study test the linear as well as nonlinear relationships between corruption and financial sector development. Our analysis utilizes a dynamic panel data model and takes care of the potential endogeneity problem in estimation. The results show that corruption has a negative effect on financial sector development for all as well as different income-group countries. Our results further show that the effects of corruption are nonlinear in nature and indicate that corruption is more financial development-reducing when its level is very high. We also test the joint effect of corruption and political instability and violence on financial development. It largely shows that their combined effect is positive, implying that widespread corruption can positively affect financial development if a country is suffering from an unstable political institution.

This conceptual paper contributes to the study of moral and immoral organizational development by combining two different perspectives: organizational learning (OL) and the worldview of Islam. The OL perspective, particularly Crossan, Lane and White’s (1999) 4I OL framework, outlines four sub-learning processes involved in strategic renewal spanning the individual, group and organizational levels. Then, the framework is recast in the light of the worldview of Islam, particularly on the natural connection between learning and moral development. From an Islamic perspective, knowledge is soteriological and plays a crucial role in the ‘purification of the heart’, i.e. individual moral development. However, corruption of knowledge can also occur, which then leads to corruption of the ‘heart’, i.e. individual immoral development. This then has profound implications for the 4I OL framework. As a result, a reconceptualized framework is conceived called ‘OL by hearts’, which outlines the strategic moral & immoral development of individuals, groups and the organization.

Corruption has been and continues to be evident in all societies, with differences only in manifestation and degrees. We focus on the manifestation and impact of corruption in the Persian Gulf oil-exporting countries and benchmark these countries against a set of non-oil-exporting Islamic countries and major non-Islamic oil-exporting countries. We first measure the degree of corruption in these countries using five of the most widely accepted direct and indirect indices of corruption. We then examine the relationship between corruption and various indicators of economic, social, and human development. Finally, we examine the association between corruption and oil endowment and the Islamic label, two common characteristics of the countries in the Persian Gulf. As such, the key focus of the paper is on the manifestation and impact of corruption in the Persian Gulf oil-exporting countries from a political-economy stand point and measurement of the impact of corruption on economic, social, and human development in the region. It should be mentioned that this paper was written before the blossoming of the “2011 Arab Spring.” The major reasons, to varying degrees, for the protests in the Mideast and North Africa have been because of decades of economic deprivation, autocratic rule, political injustice, institutional corruption, and human rights violations.

In recent years, there have been several successful examples of government-initiated trade-related policies aimed at developing industries that constitute a country’s comparative advantage. By implementing industry-specific, trade-related targeted reforms (i.e. reducing tariffs for imported equipment, thereby facilitating technology adaptation, providing access to expert consultants to help firms adhere to global standards, and simplifying customs procedures), the respective governments helped firms in nascent industries grow and become more productive.

The purpose of this paper is to contribute to the ongoing debate on government intervention (Lin and Chang 2009) and whether such intervention should be targeted to certain industries or not. Using a sample of 588 manufacturing firms in Eastern Europe and Central Asia (ECA), we find that targeted, trade-related, government policies have a limited impact on the firm total factor productivity. Contrary to the views of proponents of targeted policies, there is a “threshold of economic, legal, and political development,” below which targeted policies do not work in the ECA region and are impacted by existence and effectiveness of corruption.