Bureaucratic Corruption Research Articles

Factor Price Manipulation, Bureaucratic Corruption, and State Capacity

Factor Price Manipulation, Bureaucratic Corruption, and State Capacity

Institutional Imperfections and Buyer-Induced Holdout in Land Acquisition

Imperfect institutions, particularly in developing economies, encourage bureaucratic corruption and outside interference by political parties or civic-society organisations, thereby distorting property rights for land. We characterise conditions when an industrial buyer’s optimal design to acquire land strategically involves holdout as a response to these imperfections. We propose testable hypotheses suggesting that such form of holdout increases (i) with a reduction in corruption if the current imperfections are significant, (ii) with an increase in ease of political opposition, and (iii) during elections. We also study welfare implications and discuss the relevance of the framework and the results for advanced economies.

Regulation and Corruption: Evidence from the United States*

AbstractI exploit a panel data set on United States for the time span 1990–2013 to evaluate the causal impact of government regulation on bureaucratic corruption. Despite the stylized fact that corruption and regulation are positively correlated, there is a lack of empirical evidence to substantiate a causal relationship. Using novel data on federal regulation of industries (Al‐Ubaydli and McLaughlin [2015], Regulation and Governance, 11, 109–123), and convictions of public officials from the Public Integrity Section, I apply a stochastic frontier approach to account for one‐sided measurement error in bureaucratic corruption and the Lewbel [2012, Journal of Business and Economic Statistics, 30, 67–80] identification strategy to control for potential endogeneity of regulation. Results are striking. Based on the preferred model, there is evidence of endogeneity of regulation and absence of a causal link between regulation and corruption. However, if any of the above two econometric issues are ignored, evidence of a spurious relationship between corruption and regulation is found.

Killing the Goose That Lays the Egg: A Discourse of Politics and Entrepreneurial Development in Sub-Saharan Africa

This paper examines the relationship between a society's political culture or system and the development of entrepreneurship. Specifically, the paper examines the issues of political risks and instability, how the prevailing political culture in Sub-Saharan Africa undermines indigenous entrepreneurship and enterprise development, how the politics of privatization, indigenization and prejudice against non-indigene entrepreneurs skews the development of entrepreneurship in Sub-Saharan Africa. In addition, the consequences of excessive regulation, bribery and bureaucratic corruption on entrepreneurial development are examined. It is argued that the political system and culture of a nation affects its economic policies and business practices to the degree to which it promotes or discourages risks faced by investors.

Incentive mechanism for a sustainable public distribution system

PurposeGovernment distributing rationed goods through a public distribution system often do not reach the deserving citizens primarily due to the practice of corruption. This paper aims to design an incentive mechanism to curtail such corrupt practices.Design/methodology/approachThe incentive mechanism is developed in a principal-agent framework where the information asymmetry is in the form of moral hazard.FindingsThe mechanism designed through this study sufficiently penalizes the agent who receives bribe and incentivizes if desired level of effort is applied.Originality/valueThe paper contributes to the existing literature by developing an incentive mechanism to prevent bureaucratic corruption. Appropriate wages are also quantified in this study.

The Performance Accountability of the Public Bureaucracy in Prevention of Corruption, Collusion and Nepotism Behavior

Corrupt behavior in the bureaucratic environment tends to increase, and is even carried out in various new modes. The government's efforts to prevent corruption have been carried out by establishing a KPK institution, and or through various regulations to minimize the occurrence of criminal acts of bureaucratic corruption. There are several factors that encourage corruption, namely internal factors that exist within the individual, and external factors that develop in their environment. Internal factors are closely related to personal qualities that are shown through moral characters such as integrity or honesty. Meanwhile, external factors are triggered due to pressure and encouragement from the environment that allows for deviant actions. One of the prevention strategies carried out in a bureaucratic environment is to increase the accountability of the performance of public institutions. Accountability is a form of accountability from the government apparatus for all its policies and actions to the public. By adhering to the principle of accountability, it will minimize the occurrence of irregularities in carrying out its duties and functions. For that, it is necessary to strengthen and develop a system of accountability that is precise and clear, so that governance can run properly and accountably. Keywords: Accountability, public bureaucracy, corruption. DOI: 10.7176/DCS10-9-05 Publication date: September 30 th 2020

(Un)principled principals, (un)principled agents: The differential effects of managerial civil service reforms on corruption in developing and OECD countries

AbstractDo management practices have similar anticorruption effects in OECD and developing countries? Despite prominent cautions against “New Zealand” reforms which enhance managerial discretion in developing countries, scholars have not assessed this question statistically. Our article addresses this gap through a conjoint experiment with 6,500 public servants in three developing countries and one OECD country. Our experiment assesses Weberian relative to managerial approaches to recruitment, job stability, and pay. We argue that in developing countries with institutionalized corruption and weak rule of law—yet not OECD countries without such features—“unprincipled” principals use managerial discretion over hiring, firing, and pay to favor “unprincipled” bureaucratic agents who engage in corruption. Our results support this argument: managerial practices are associated with greater bureaucratic corruption in our surveyed developing countries, yet have little effect in our OECD country. Alleged “best practices” in public management in OECD countries may thus be “worst practices” in developing countries.

Corruption, Democracy, and Privately Financed Infrastructure

Do political institutions moderate the influence of corruption on privately financed infrastructure projects? We argue that electoral competition incentivizes politicians to monitor bureaucratic corruption and focus on the public benefits of projects. Without such incentives, corruption is not monitored and the private benefits of bribes and favorable contract terms are responsible for increasing numbers of projects. Studying 116 countries between 1984 and 2012, we find that as public-sector corruption increases in democracies, no change in the number of projects is observed, while more projects emerge in non-democracies as corruption worsens.

Corruption and Public Service in an Extended Solowian Growth Model with Endogenous Labor Supply

This study examines the impact of bureaucratic corruption on economic growth of a small open economy. The economy is composed of two types of households (the workers and the officials) and two sectors (the industrial sector and public sector). Corruption may occur in different parts of the economy. We built a model for analyzing the role of corruption on economic growth, income and wealth distribution between the officials and workers. The model takes account of corruption in the capital market, the labor market, and production sector. It describes dynamic interactions of growth, corruption with endogenous tax rate and different exogenous corruption rates. We simulate motion of the dynamic system and demonstrate how an increase of corruption in the production sector, in the labor market, and other parameters affect the transitory process and long-run state of economic growth.

The impact of local corruption on business tax registration and compliance: Evidence from Vietnam

This paper studies how corruption affects two fundamental dimensions of a firm’s tax compliance: the likelihood of tax registration (possession of a tax ID) and the tax compliance ratio (the ratio between the firm’s tax payment and revenue). We explore a census covering all Vietnamese household businesses and leverage the differential exposure to corruption, depending upon which province similarly situated businesses are located within. Comparing household businesses in contiguous commune pairs that straddle provincial borders, we discover two seemingly contradictory results. We find that a household business that operates in a more corrupt province is more likely to possess a tax ID, even though it does not necessarily pay more in taxes. In fact, among firms that possess tax IDs, an increase in corruption is associated with a decrease in the tax compliance ratio. We suggest a plausible explanation for this pattern is that corrupt bureaucrats encourage tax-ID possession, because the registration form provides them with better business information to extract bribes. This mechanism implies that an increase in corruption should be associated with a smaller increase in tax-ID possession among more “visible” businesses. We test and find supporting empirical evidence for this prediction.

Efforts to Prevent Bureaucratic Corruption Based on the Piercing Principles of the Governance Veil in Realizing Good Governance and Clean Governance in Indonesia

The purpose of this study explains the principle of piercing the governance veil can support the realization of good governance and clean governance in order to prevent the misuse of corruption. The research method is a normative legal method with a statutory approach), concepts and cases. The results of this study can be explained that the principle of piercing the governance veil supports the realization of good governance and clean governance in order to prevent abuse of the power of the authorities (governors / regents / mayors) so as to prevent unlawful acts carried out by the executive as the holder of the people's mandate. The governance veil principle can limit or prevent illegal actions carried out by the government and its staff for personal gain or enrich oneself and its cronies. The conclusion of this study is that due to the legal principles of the governance veil, it can lead to KKN and the occurrence of abuse of authority, resulting in state losses, then criminal penalties based on Law No. 20 of 2001 concerning criminal acts of corruption.

Petty corruption in the public sector: A comparative study of three East African countries through a behavioural lens

ABSTRACT This article presents comparative evidence about the relevance of behavioural drivers in relation to petty corruption in three East African countries. It discusses the potential to incorporate behavioural insights into anti-corruption policy-making. Persistently high levels of bureaucratic corruption prevail in many countries across the African continent. This along with the limited effectiveness of conventional anti-corruption prescriptions call for a contextualised understanding of the multiple factors determining corruption-related decision-making. Adopting a behavioural lens involves accounting for the human factor as it relates to the effects of sociality and social constructs on propensities for corruption. As such, this novel approach complements the literature that has sought to understand corruption on the basis of political, economic, and institutional drivers and constraints. Field research conducted in Tanzania, Uganda and Rwanda found evidence for such behavioural drivers, showing that citizens are swayed by social pressures and beliefs that ultimately spur petty corruption by endorsing associated maladaptive practices. Sustained by social norms of group solidarity and reciprocity and legitimised by commonly shared perceptions of corruption as the norm, the research points to a problematic overlap of the public (formal) and the socio-cultural (informal) spheres. By adding a behavioural dimension to the study of the drivers of corruption, this article seeks to contribute towards the development of more effective anti-corruption policy formulation that acknowledges the pitfalls attached to behavioural factors that conventional anti-corruption prescriptions have largely failed to address.

Effects of environmental regulation on capacity utilization: Evidence from energy enterprises in China

Abstract Overcapacity seriously hinders the sustainable development of China's economy. However, although there is widespread concern about policy regarding this issue, the discussion of the causes of overcapacity and of the methods used for its management in academic research remains theoretical, and evidence from empirical data is lacking. Therefore, using data on energy enterprises, we measure enterprise-level capacity utilization with the improved production function method and empirically study the effects of environmental regulation on energy enterprises’ capacity utilization using a Tobit regression model. We conclude that environmental regulation is conducive to improving the utilization ratio of energy enterprises and managing overcapacity in the energy sector. Moreover, the effect of environmental regulation is influenced by the regional institutional environment. With the increases in decentralization and bureaucratic corruption, the influence of environmental regulation on the overcapacity of energy enterprises has weakened. In addition, the medium effect model reveals that environmental regulation can be used to manage overcapacity because it increases production costs and stimulates R&D innovation, and the path of stimulating innovation is dominant in improving the capacity utilization of energy enterprises during the sample period. Finally, environmental regulation can reduce the gap between the enterprises' capacity utilization ratios in the energy industry, making the distribution of the capacity utilization rate of energy enterprises uniform and improving the efficiency of resource allocation in the energy industry.

Poverty Reduction Strategies in India

India has massive poverty partly due to poor policies and partly due to inefficient and corrupt bureaucracy. There is a need to encourage social entrepreneurs and encourage public participation in poverty removal. A range of initiatives are required to create the right set of policies, practices and innovations.

Legal reform or erasure of history? The politics of moral crimes in Afghanistan

ABSTRACT In this article we reflect on our efforts to study the prosecution of moral crimes in Afghanistan. In the process of collating information about men and women imprisoned for moral crimes such as adultery, we found evidence that pointed to large-scale incarceration of men for the uncodified crime of elopement. After establishing this fact through a careful review of official data, the article considers two interrelated themes. First, we argue that government attempts to conceal its extralegal practices cannot be reduced to the question of a corrupt bureaucracy or weak governance. Rather, they reflect a fundamental tension between a modern state’s interest in projecting the rule of (codified) law and societal expectations arising from both Islamic and customary law. Second, we suggest that officials seek to address this conceptual tension between the different bodies of law through a complex process involving both accommodation and concealment. In day-to-day judicial practice, ‘assimilation’ refers to attempts to rely on sharia provisions to accommodate customary practices which have no counterpart in statutory law. ‘Dissimulation’ refers to bureaucratic actions aimed at concealing the actual practices which make such extralegal accommodations possible.

Political Economy of Rent Seeking in Local Governance: Causes, Forms, and Responses Towards (Evidences from Adigrat Town Administration, Ethiopia)

Irrespective of the nature of a state, the issue of rent seeking remains ubiquitous. This paper assesses the prevalence of rent seeking from local governance perspective providing a focus on the major causes, forms and the efforts made in Adigrat Town. In so doing, the study has used both quantitative and qualitative research methodologies. Primary and secondary data sources were also utilized. Accordingly, the sluggish form of public services, lack of institutionalized practices, prevalence of mutual mistrusts, materialistic and self-centered motives, and embedded patrimonial relations have unleashed the practices of rent seeking in the Town. Bureaucratic corruption, lobbying practices, bribery, and actions of collusive interests were endemic forms of rent seeking prevailed in the Town. In connection, rent seeking situations where individuals negotiate over exclusive benefits and favor-seeking groups capture the public offices were common. Remedies of mainstreaming rent seeking as a public agenda, regular evaluation on performances, involvement of stakeholders in decision making, enforcement of legal measurement, introduction of ICT, and awareness creation were found too nascent. Thus, the respective public sectors should acquaint with anti-rent seeking strategies including meritocracy, party and government roles delineation, rebuilding the social capital, independent law enforcement, and delivering ICT-backed services.

Corruption, Pricing of Public Services, and Entrepreneurship in Economies with Leakage

The paper presents a theoretical model with bureaucratic corruption where bribe income can leak out of an economy. In such an economy given its perception about the extent of leakage the government sets the price of public services required for entrepreneurship by maximizing the welfare of the economy. We show that the corruption persists at the equilibrium. The government prices its services at a level higher than their unit cost of provision in high leakage economies. However, the price falls to unit cost level in more prosperous economies. We also find that the number of entrepreneurs starting business and the total income received as bribe are non-increasing functions of the prosperity level and the extent of leakage from the economy. The predictions of the model generate interesting policy implications: for example it clearly shows that in low prosperity economies the control of leakage may induce higher level of corruption, while the opposite is true in the high prosperity economies.

Model of Bureaucratic Corruption Prevention

The Corruption Perception Index in Indonesia in 2018 is ranked 89th out of 180 countries, far below Singapore, which is in third place and Malaysia at 61st. Therefore, this study aimed to find a model for preventing corruption in government agencies using the independent variables: Organizational Culture (X1), Competence (X2), Leadership (X3), and Internal Control (X4). This research employed quantitative methods (survey), and data analysis uses correlation analysis and multiple regression with the help of the SPSS software program. The number of the target population involved 357 people (employees of government financial institutions), and 100 people were taken randomly as samples. The results showed that: a) the corruption prevention model in government agencies was Y = 1.507 + 0.878 X1-0.365 X2-0.282 X3 + 0.401 X4; b) the variable of organizational culture (X1), competence (X2), leadership (X3), and internal control simultaneously had an R2 value of 0.471, meaning that this variable contributed 47.1% to corruption prevention and the remaining 52.9%. % referred to other factors; c) organizational culture (X1) and internal control (X4) had a dominant effect on corruption prevention (Y); d) competence (X2) and leadership (X3) negatively affected the corruption prevention. This study contributed to lowering the corruption perception index by strengthening organizational culture and internal control, while strengthening competence and leadership must be followed by anti-corruption awareness.

Demoralization of Government Bureaucratic Corruption in East Kutai District Head Ismunandar

This study uses the literature review method through journals and supporting reports that are related to this study and explained descriptively through data obtained from journals or reports. The findings generated in this study are corruption cases involving regional heads in East Kutai and their ranks are inseparable from the existence of oligarchic politics, all of these cannot be separated from the compatibility of a project. Cases like this are rife in bureaucratic and political elites who sometimes use family connection mechanisms. According to records from the Corruption Eradication Commission (KPK) from 2015 to 2018 in terms of cases and the number of suspects continues to increase. In 2018, the KPK handled 57 cases with 261 suspects and a total loss of Rp385 billion. Where the average cases handled by the KPK per month are five cases with an estimated value of Rp6.6 billion. Corruption acts carried out by the KPK mostly function as chairmen or members of the Regional House of Representatives (DPRD) with a total of 103 suspects. Acts of corruption are often carried out by political elites in the DPR as well as in law enforcement agencies. However, the most vulnerable to corruption is the village. the most vulnerable sector in 2018 is the village budget. There were 96 cases of corruption related to the village budget involving 133 suspects with state losses of Rp. 37.2 billion. Meanwhile, the sector that caused the highest state loss was the banking sector amounting to Rp2,100 billion (16 cases).

Does Corruption in Exporter and Importer Country Influence International Trade?

ABSTRACT We investigate whether bilateral exports of goods flowing from Vietnam to its 46 top trading partners are affected by corruption over the period 2000–2014. We capture the effects of corruption of Vietnam and her trade partners, separately using the corruption perception index (CPI) developed by Transparency International. The CPI captures both bureaucratic and political corruption perceptions. Our key results are as follows. We find that corruption in Vietnam has discouraged its bilateral export flows. The negative effect of corruption is highly significant in the long-run. In driving Vietnam’s exports, perceptions of corruption in Vietnam are found to be more potent than perceptions in importer countries. We find that the sign effects of corruption in Vietnam or trading partner countries (or importers) are not dependent on whether trading partners are developed or developing. However, we do find that corruption discourages developing countries more than developed countries from importing goods from Vietnam. We confirm the robustness of our results using the control of corruption (COC) measure of corruption extracted from the World Bank Database.