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.

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.

This article analyzes different cultures of corruption with regard to their evolutionary stability, i.e. their ability to annihilate small disturbances in the equilibria between corrupt and noncorrupt agents. The article starts with the development of an evolutionary model of the interactions between corrupt and noncorrupt citizens and functionaries of the state, which is subsequently explored by formal analyses and computer simulation. It turns out that zero-corruption is always evolutionarily stable, whereas pervasive corruption displays only conditional evolutionary stability and thus is empirically rare. Between these two extremes there is organized bureaucratic corruption, which is in most cases quasi-stable with fluctuations around an equilibrium representing the coexistence of corrupt and noncorrupt agents. Empirical analyses of corruption data from 89 countries seem to corroborate these theoretical insights.

In his first term (2012–2017), Xi Jinping’s signature domestic policy was an anti-corruption campaign that targeted political enemies and venality in public office. The anti-corruption work has continued in his second term while being superseded in domestic political importance by a campaign to “Sweep Away Black and Eliminate Evil (2018–2020).” On the surface, the campaign to Sweep Away Black and Eliminate Evil is an anti-crime campaign that focuses on the “black and evil forces” of organized crime and their official protectors, but its scope extends well beyond the ganglands to target a wide range of social and political threats to the Chinese Communist Party (CCP). Drawing on interviews with government officials, police and citizens as well as analysis of policy documents, this paper argues that the campaign is a populist initiative designed to bolster CCP legitimacy and serve as a mechanism of social control. Like the Chongqing prototype that inspired it, however, the campaign harbors a dark side that could undermine the contemporary Chinese social contract in which people are willing to sacrifice personal freedoms in exchange for security and material benefits.

This article examines and evaluates a variety of factors that characterize the PRC at the end of 2023–including elite politics and Xi Jinping’s position; a malaise that grips society; the “securitization” of almost all dimensions of policy; economic challenges and concerns; and the state of the CCP as a ruling Leninist party.

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.

The word “corruption” has a moral as well as a qualitative connotation. Corruption is immoral and therefore it has to be stamped out. In this chapter, we discuss some of the quantitative measures of corruption. The Transparency International (TI) has developed several measures. The most popular measure is known as the Corruption Perceptions Index (CPI).

The TI produces another measure of corruption known as the Global Corruption Barometer (GCB). A third measure is known as the Bribe Payers Index (BPI), which assesses the supply side of corruption and ranks corruption by source country and industry sector.

The World Bank corruption index is known as the Control of Corruption Index (CCI). Yet another measure of corruption known as the International Country Risk Guide (ICRG) has been published on a monthly basis since 1980 by what is known as the PRS Group.

A final measure that is discussed in this chapter is known as the Opacity Index (OI). This index was produced for the first time in 2001, by the PricewaterhouseCoopers (PwC).

Since the Second World War, Africa and especially Sub-Saharan Africa (SSA) has had the poorest economic performance of any region in the world. Ironically, many African countries had set out with high hopes once they had thrown off the yoke of colonial rule but it was not long before disaster struck. Against the background of an expanding world economy Africa experienced ‘a chronic failure of economic growth’ (Collier and Gunning, 1996), so that by the end of the 20th century incomes per capita were little better than they had been at the time of independence, and in some cases a good deal worse. The main problem was the failure to improve the efficiency of resource use; in contrast to the position in many other developing countries total factor productivity was either static or negative for much of the time (Ndulu and O'Connell, 1999; Crafts, 2000). Thus while poverty was declining elsewhere, it was increasing steadily in SSA. By the turn of the century two-thirds of the population were estimated to be living at subsistence or below the absolute poverty line, while nearly one-half the world's poor lived in Africa (United Nations, 1997).

There are of course many factors which can explain this remarkable state of affairs, but the one we shall focus on this chapter is Africa's great weakness in statecraft, by which we refer to political systems, bureaucracies, administrative organizations, property and legal rights and general issues of trust and contract enforcement. In other words, it is a question of good governance as opposed to bad governance and corruption. The general argument here is that with few exceptions African countries have lacked a sound social and political base which would favor growth and development and that this base has tended to deteriorate over time.

Corruption is understood by the majority to be harmful to a country although the reason why is rarely understood. For this reason, economists have endeavored to determine the causes and consequences of corruption. Corruption is an important issue for Bangladesh since it is widely spread throughout the country and can lead to many unwanted consequences. Li et al. (2000) found that corruption, for example, can lead to misallocation of resources. Once bribing becomes an integrated part of the market, it will no longer be equal to bidding for scarce resources. They also found that corruption can be harmful to innovation; entrepreneurs have to get licenses and permits to start up new businesses and are often subjected to corruption. This is a consequence of corruption that could be detrimental to Bangladesh's growth. The quality of goods may also be adversely affected, with decisions about the issuing of permits and licenses being determined by the largest bribe paid rather than the highest quality of goods (Lambsdorff, 2007).

This chapter is divided into 4 parts: Part I discusses the concept and various quantitative measures of corruption. As far as this author is aware the PRS Group was the first to score countries based on corruption. Since then a multitude of indices have been produced by well-known institutions such as Transparency International, the World Bank and PricewaterhouseCoopers.

Part II deals with the magnitude of corruption in Bangladesh and more specifically looks at the effectiveness of anti-corruption agencies within the country. The causes of corruption in Bangladesh are also explored, with particular emphasis on banking, customs and telecommunications sectors. In addition, Part II looks at the consequences of corruption on economic growth.

Part III discusses five possible remedies for corruption in Bangladesh and Part IV provides a conclusion.

Since the country's birth in 1971, Bangladesh has hardly experienced good (i.e., just) governance that could potentially allow for political stability and sustainable development. In fact, many commentators consider that challenges such as the rising degradation of natural resources, water crises, the widening gap between the rich and the poor, corruption, crimes and gender issues, are largely due to persisting malgovernance. The growing scale and mutual reinforcement of these conditions appear to have been pushing the country towards social, economic and environmental vulnerability.

Against this background, the paper explores ways to address the prevalent unsustainable situations focusing on the need for just governance within the cultural and human context of the country. It outlines the importance of nurturing and strengthening the cultural beliefs and traditions, including religiosity, patriotism, family and social bondage, self-reliance and traditional happiness that can help progress Bangladesh towards achieving a better governance in terms of socioeconomic and environmental justice. Depicting the inherent sustainability characteristics of Bangladesh, the paper argues that refurbishing of governance with competent, honest, responsible and patriotic politicians, civil servants, activists and other actors is of utter necessity for reversing the current trends in the country.

The chapter concludes that the cultural values of Bangladeshis, which were remarkable in the past, can help revitalize the country's governance for achieving a locally branded “sushashon”, i.e., good and just governance.