Corruption in transition economies: Socialist, Ottoman or structural?

Abstract

Using data from 64 countries in Eastern Europe and MENA, I study the long-run effects of Ottoman and socialist rule on the incidence of corruption. To proxy Ottoman legacies, I estimate the length of Ottoman rule across all Ottoman successor states. Conditioning on income per capita, I find a robust adverse effect of both socialist and Ottoman legacies on present day corruption – a finding which reconciles two rival accounts of post-socialist corruption from the transition literature. The results are robust to controlling for potential confounders and instrumenting for both per capita income and the length of Ottoman rule. However, the explanatory power of long-run historical determinants of corruption is lower than the contribution of short-run factors. While present day income explains about half of the total variation in corruption across post-socialist countries, Ottoman and socialist legacies jointly account for about one third. Although history does matter, these findings suggest that most of the corruption observed in Eastern Europe, Central Asia and the Balkans today may not be inherently ‘eastern’ or socialist. Rather, the data are consistent with an interpretation of corruption predominantly as a manifestation of persistent economic under-development.