DO LITERACY AND A MATURE DEMOCRATIC REGIME CURE CORRUPTION?

Abstract

(ProQuest: ... denotes formulae omitted.)1. INTRODUCTIONWhy is corruption more prevalent in some countries than in others? Do mature democracies nurture less corruption than young democracies? Does an educated populace compel government to become more transparent? The present paper attempts to find answers to these questions by examining the interactive impact of the durability of a democratic regime and educational attainment on corruption levels of a nation. A vast strand of literature1 has explored the factors that can affect the corruption level of nations (Kwok and Tadessee, 2006; Akhter, 2004; Treisman, 2000; Ades and di Tella, 1999; Leite and Weidmann, 1999; La Porta et al., 1997; La Porta et al., 1997). Yet, the interactive role of democratic durability and educational attainment has not been explored in the literature. Can higher levels of educational attainment results in a stronger impact of democratic durability on corruption?The nature and stability of political regimes have received strong attention from the researchers of recent world polity. Recent literature suggested that democracy fosters economic growth and development through protected property rights (Prezeworski and Limongi, 1993), via increased rule of law and more efficient allocation of resources (Scully, 1988), and by providing effective regulation of anti-competitive practices that allows private corporations to grow (Ayres, 1996). Bahmani-Oskooee and Goswami (2006) show that political rights and civil liberties, two fundamental characteristics of democracy, reduce the presence of black market in an economy. Hence, researchers, in general, tend to agree that the presence of democracy constituting of institutions like political rights, civil liberties, press freedom, and freedom of speech, paves the way of economic prosperity. Literature has been ambiguous about the effect of democracy on corruption (Qizilbash, 2008; Chowdhury, 2004; Shleifer and Vishny, 1998). The dominant view in the literature is that democracy has a deterrent effect on corruption, be it through a direct channel or an indirect channel. The mass uprising against the incumbent authoritarian regimes in the Middle East, dubbed by the media as 'Arab Spring' has again instigated interests in this area. Reportedly, one of the main trigger of such uprisings is the rampant corruption by the incumbent regimes. Corruption in the democracy is perceived to be less, however not free either. Recent 2G spectrum scam in India (largest functional democracy since its independence from the British colonial rule in 1947) of US$ 5.61 billion is an example of marginal scale of corruption indicating perhaps that the presence of democracy only is not sufficient to curb corruption.In this context, durability of a democratic2 regime might be an important factor to consider that has received relatively less attention. Montinola and Jackman (2002) show that corruption is actually lower in authoritarian regime than in nascent democracies, although once democratization reaches a certain threshold, this relationship changes and democratic regimes fare better. Similar to their study, Sung (2004) stresses on the non-linear association between democracy and corruption. His study shows that starting from an authoritarian regime, democratization initially results in greater corruption before it eventually leads to a decline in corruption. Similar findings have been established by Mohtadi and Roe (2003) and Rock (2009). Mohtadi and Roe (2003) show that young democracies suffering from insufficient checks and balances and lack of transparency, provide rent-seekers with greater access to public officials and hence greater opportunities for collecting public sector rents, at least up to a point, without making the corrupt acts of rent-seekers and officials open to public scrutiny. As democracy matures, transparency and monitoring activities become stronger and, thus, the probability of getting caught rises as well. …