High Corruption Research Articles

The institutional dimension of the inequality–corruption nexus: A varieties of capitalism assessment

AbstractAre unequal societies prone to the abuse of economic power to influence political decisions for private gains? We investigate how changes in inequality affect changes in corruption, controlling for comparative political economy factors. Our varieties of capitalism (VoC) approach explains corruption trends from an institutional viewpoint: liberal market economies (LMEs) exhibit lower corruption despite having high inequality. Coordinated market economies exhibit lower inequality but higher corruption, while state‐led non‐liberal economies have low inequality despite showing a range of degrees of corruption. Resource exporting economies show high corruption as well as inequality, akin to developing countries despite having higher national incomes. The relationship between changes in inequality and corruption diverges between the different VoC: strongly positive in coordinated and state‐led market economies, of an unclear sign in resource‐exporting economies, weak in resource‐poor developing countries, and downright negative in LMEs. Institutions are thus critical mediators of the socioeconomics of corruption.

Who supports the New Left? Evidence from Croatia

ABSTRACT After decades of leftist quiescence in Croatia, new social movements have created viable political alternatives. This paper analyses the New Left's electoral support using 2021 survey data. The findings show greater support from younger, urban, and culturally liberal individuals, who do not favour increased state market intervention. While some New Left factions support neoliberal policies, this stance must be viewed in the context of high corruption in Croatia, as New Left voters care about socio-economic inequality. These findings align with recent qualitative studies, suggesting further research into the links between corruption, individual attitudes, and support for the New Left.

The impact of special economic zones on industrial enterprises’ productivity in Russia

ABSTRACT This article explores the impact of Special Economic Zones (SEZ) on Russian industrial firms’ productivity, using propensity score matching to address heterogeneity issue. Our investigation contributes to the existing literature in several ways. First, our study fills a gap in the literature that evaluates the effectiveness of Russian SEZs. Besides, we attempt to solve the problem of self-selection and minimise the impact of unobservable effects by matching similar firms. Moreover, we reveal the role of SEZs in increasing productivity and competitiveness of Russian enterprises considering regional economic development and corruption. We take into account the factors that affect the firms’ performance both at the municipal and regional levels. An ambiguous effect of SEZs on productivity was found, but a positive significant influence of SEZs on productivity was revealed in regions with relatively higher corruption and with relatively lower GRP per capita.

THE IMPLICITY OF RELATIONSHIP BETWEEN TRANSPARENCY OF BANK LENDING TO THE REAL SECTOR AND ECONOMIC DEVELOPMENT: WORLD EXPERIENCE

The modern development of the global economy is associated with multiple transformational challenges that raise the issue of ensuring an appropriate level of mutual trust between banking and industrial businesses. This issue is especially relevant for Ukraine, which is facing a crucial task - the post-war reconstruction of the national economy on the basis of sustainability, integrity and environmental friendliness. The aim of the paper is to identify implicit links between the transparency of bank lending to the real sector and economic development over the past 15 years in twelve countries, including Ukraine. This study is based on the correlation and regression tools for analysing relationships. As a result, the article confirms the hypothesis of the existence of significant cause-and-effect relationships between improving banking transparency, reducing corruption, growing economic freedom, increasing lending to the real sector and ensuring economic growth for a number of countries, regardless of their level of economic development. It has been found that in countries with steadily high corruption and economic freedom perception indices, the significance of the correlation with the development of bank lending to the real sector is lost. The reasons for deviations from the natural dialectic of the studied relationships are revealed in the example of India and Turkey. The peculiarities of their formation, preconditions and prospects for strengthening in Ukraine are highlighted. The contribution of the National Bank of Ukraine to increasing the level of transparency of lending activities of second-tier banks is investigated.

Re-examining the curse of natural resources in SSA: New evidence from disaggregated natural resources and types of corruption

Understanding how corruption affects the relationship between natural resources and growth has profound implications for sustainable development goals in Sub-Saharan Africa (SSA). This study investigates the nexus between natural resources, economic growth, and corruption in SSA from 1985 to 2022, by employing a Panel Smooth Transition Regression model. Results indicate that corruption distorts natural resources and lowers economic growth. The magnitude of the effect of corruption depends on the type of corruption. The impact of political corruption is more relevant than the others form of corruption. In a low corruption regime, mineral, oil, and forest resources do not affect growth; (b) in a high corruption regime, oil and forest resources hinder growth whereas mineral resources lead to higher economic growth. The analysis highlights the need for policy measures that encourage sustainable economic development and promoting reinforcement of institutional quality.

A Review of Effectiveness of Anti-Corruption Strategies and Institutions in Kenya

It is often stated that the fight against corruption in Kenya does not need strong men; rather, the onslaught against pilferage and plundering of public resources requires strong institutions. Unfortunately, present efforts to combat corruption in Kenya have yielded a mixed bag of results, both negative and positive. Ostensibly, extant discourses indicate that anti-corruption institutions in Kenya and the Ethics and Anti-Corruption Commission in particular have been unable to achieve a single high-profile conviction. Towards this, the debate on the effectiveness of anti-corruption strategies and the institution in the country is interminable. It is, therefore, the view of this study that institutions in Kenya face systemic and endemic snugs that are perhaps preventing them from achieving their institutional duty of custodianship of good practice. Results from this conceptual review indicate that although Kenya has one of the most progressive legislative and institutional frameworks on anti-corruption, the Corruption Perception Index has it that Kenya still experiences high corruption, with a score of 3 out of 10, or a ranking of position 126 out of 180 countries. Although the study noted political interference, particularly from the executive, it underscores that anti-corruption institutions do not have adequate human and financial resources, which are thought to hinder their capacity to investigate and prosecute corrupt individuals. It is recommended that Kenya should strengthen legal safeguards, empower whistleblowers, implement various anti-corruption strategies, and entrench a culture of integrity. The study recommends that the anti-corruption institutions should be allocated sufficient resources, both human and financial, so that they carry out their duties independently. The study further recommends that the future of anti-corruption actions depends on incorporating civil society organizations, the media, and international partners into the campaign against the misappropriation of public funds, as these entities play peripheral, yet pivotal roles in oversight, advocating for reforms, and enhancing public awareness. Top of Form Over and above, the study notes the criticality of freeing independent institutions from the control of the executive so that they can work autonomously.

Corruption and Bank Risk‐Taking in Dual Banking Systems

ABSTRACTResearch Question/IssueWe investigate whether the risk‐taking of Islamic banks is affected differently by corruption compared to conventional banks. We also examine whether the characteristics of the Shari'ah Supervisory Board (SSB) of Islamic banks and the characteristics of the board of directors of conventional banks play an effective role in moderating such an effect.Research Findings/InsightsWe find consistent evidence that banks in countries with higher corruption have higher bank risk for both conventional and Islamic banks. However, this association is attenuated by the size of the SSB, the presence of female board members, and higher academic qualifications of SSB members. For conventional banks, the moderating effect of the presence of female directors and academically qualified members on the board of directors is also prevalent but to a lesser extent.Theoretical/Academic ImplicationsThis study contributes to the corporate finance literature more generally by highlighting the role played by corporate governance, particularly the presence of female members and academically qualified members on the SSBs of Islamic banks and on the board of directors of conventional banks, in mitigating the effect of corruption on bank risk‐taking for the two bank types.Practitioner/Policy ImplicationsOur findings are based on a matched sample of banks operating in 10 OIC (Organization of Islamic Cooperation) countries and have important implications for bank stability and bank governance reforms. On the detrimental side, urgency of the anti‐corruption campaigns in these countries is justified due to the significant effect of corruption on risk‐taking for both conventional and Islamic banks. Overall, to better fight corruption in countries with dual banking systems, there is a need to enforce stricter rules for all types of banks.

The Emerging Bengal Tiger: Opportunities and Challenges for MNCs and Policymakers

Bangladesh has been one of the fastest growing economies over the last two decades, with economic growth averaging over 6%, per capita income crossing the World Bank’s (lower) middle-income country threshold, and the criteria for graduating from the UN’s Least Developed Country (LDC) list fulfilled. However, regulatory inefficiency, high corruption, and poor infrastructure still create major challenges for businesses wanting to operate in the country. We analyze the lessons that Bangladesh’s sustained economic growth and development have for policymakers. We also generate insights for MNCs on how to operate in this rapidly-growing, but challenging, emerging market.

Fiscal Enforcement and Elections in the Context of High Corruption

The effect of electoral competition on corruption, rent-seeking and informality remains poorly understood, especially in the context of post-communist economies. In a context where there is little moral value attached to law abidance, businesses or households that engage in informal activities might perceive a tolerant government as “magnanimous” and might be persuaded to support it in upcoming elections. In this paper, we investigate the case of Albania, a post-communist transition economy, characterized by high levels of corruption. The objective of this paper is to obtain insight into fiscal enforcement during elections, hence to further our understanding of the relationship between corruption, clientelism, informality and elections in the context of a transition/post-communist country. To this end, we report complementary quantitative and qualitative analysis suggesting that the incumbent deliberately lowers monitoring of enforcement vigilance before elections (e.g., through lower/fewer fines) and yielding insights into how such behaviour effects come about.

Extremism as a form of legal nihilism

One of the global problems of the modern world is considered - the problem of extremism, which is the theory and practice of achieving socio­political, religious, national goals with the help of extreme, prohibited methods. From a political point of view, extremism is an ideology of protest against established social structures and institutions of power, which is designed for a wide public resonance and is accompanied by calls to undermine stability and violence. At the same time, extremism is a form of nihilism that denies universally recognized values and ideals, including law, demonstrates a tendency to extreme ideas and actions, fanaticism. Three components of legal nihilism are considered: worldview, psychological and behavioral. The strategy for implementing the provisions of the ideology of extremism is terrorism - an activity aimed at undermining social security, intimidation, and destabilization. The forms of manifestation of this phenomenon are political, economic, national, ecological and religious extremism. The causes of legal nihilism and extremism are identified, among which the most important are socio-political factors, namely: the weakening of state power and the passivity of its power structures; high corruption of officials; criminalization of society; assistance to extremists by representatives of foreign public organizations. The opinion that anomie is a stimulus to the deformation of legal consciousness and the formation of legal nihilism is substantiated. Forms and ways of spreading extremism are studied, including through the Internet. The personality of the extremist is characterized. It is argued that the danger of extremism lies not so much in the essence of views and the form of their expression, but in the goal that extremists seek to achieve, in the methods of achieving it, including aggression, violence, radical, often illegal actions. Public awareness of the danger of extremism, improvement of its legal culture, economic situation and efficiency of state power, together with the effectiveness of the legal system, will prevent the deformation of legal consciousness and the existence of this global problem.

What Influences the Propensity to Report Corruption to Relevant State Authorities? Evidence From Ghana

Encouraging the public to report corrupt acts to state authorities is indispensable in combatting corruption. This article uses the Afrobarometer surveys (Rounds 7 and 8) focusing on Ghana to address a key question: Will high corruption tolerance and less trust in government reduce the tendency to report corrupt acts to relevant state authorities without fear? The current work draws on social accountability theory and political settlements framework. Our results indicate that tolerance of corruption does not predict the perceived propensity to report corruption, whereas trust in government is, with high trust increasing the likelihood of reporting corruption. The current work extends the substantiative understanding of the conditions under which respondents believe that ordinary people may or may not report corruption and the implications for strengthening anti-corruption work.

Does the gender composition of local governments matter for firms’ information environment? Evidence from China

This study examines whether and how the gender composition of local governments influences the information environment of local firms. The extant economic literature presents a debate on whether policy outcomes of female politicians differ from those of their male counterparts. Using data from prefectural cities in China from 2005 to 2019, we isolate the gender-related impact of female officials on local firms from electoral dynamics and focus on a crucial policy outcome – the information environment of firms. We find a positive relationship between the presence of female officials and the information transparency of local firms. Also, this gender effect intensifies during high corruption periods and in gender-diverse firms but diminishes when national uncertainty is high. Overall, our empirical results contribute to the ongoing debate on gender differences in policy outcomes by supporting the gender differences model that female politicians tend to adopt a gender-specific leadership style in competitive environments.

Public Debt and Economic Growth in Africa in the Pre-Covid Era: The Role of Control of Corruption

There is evidence of recent rising public debts and low economic growth in Africa which is being attributed to the COVID-19 pandemic and the geopolitical tensions from the Russia-Ukraine war. With the evidence of also recent high corruption amidst low investments in Africa, it is thought-provoking to find empirically how public debt impact on economic growth per capita among African countries even before the COVID-19 pandemic and the geopolitical tensions from the Russia-Ukraine war with the mediation of control of corruption. The study used secondary data from the World Development Indicators, World Economic Outlook, and Worldwide Governance Indicators. The annual data spans from 1996 to 2019 for 45 countries. The study deployed a dynamic panel data estimation technique and controlled for other variables. The findings show a negative impact of gross debt percentage of GDP on economic growth but a positive interactive effect of excessive accumulation of gross public debt and the control of corruption on economic growth per capita among countries in Africa before the outbreak of the COVID-19 pandemic. In this COVID era of high public debt, governments can reduce their indebtedness by financing appropriate infrastructure while controlling corruption to increase the economic growth in their countries.

Insight into the optimal control strategies on corruption dynamics using fractional order derivatives

The fractional-order design for conceptualizing corruption offers several advantages on the corruption spreading over the integer-order corruption models such as acknowledgement of the intricate dynamics of corruption, including corruption super-spreading aspects, variable corruption transmission rates, it capture the persistence of memory effects, accounting for the past trajectory of corruption epidemic, and also providing a more accurate explanation of corruption dynamics. The author of the study has formulated the fractional order model on corruption dynamics by dividing the total population into five sub-groups namely the susceptible group, the exposed group, the moderately corrupted group, the highly corrupted group, and the corruption repented group. In the qualitative analyses section the author of this study has: shown the model solutions existence and uniqueness by applying the well-known Picard–Lindelöf criteria, computed the model basic reproduction number using the next generation approach, computed the model equilibrium points and investigated their stabilities, re-formulated the corresponding fractional order optimal control problem using the proposed three time-dependent controlling variables (prevention measure, moderate corruption treatment measure and high corruption treatment measure). The necessary optimality conditions for the fractional order optimal control problem and the existence of optimal control strategies are derived and presented by applying Pontryagin's Maximum Principle. Eventually, the study demonstrated the effectiveness of the combinations of the three controlling strategies through numerical methods (simulations) and the analysis results shows that the implementation of the three time-dependent controlling strategies significantly minimizes the number of corrupted individuals in the community.

China’s experience of infrastructure megaprojects in Eurasia and Africa: Successes and contradictions

The research relevance is determined by the unprecedented scale of Chinese infrastructure initiatives, their potential impact on regional development and the geopolitical balance of power, as well as the controversial nature of their socio-economic and environmental consequences in the context of current global transformations. The study aims to provide a critical analysis of the successes and contradictions of Chinaʼs infrastructure initiatives. Synthesis, comparative analysis, critical analysis, modelling, structural-functional and systematisation methods were used in the study. The results of the study demonstrate the significant potential of Chinese infrastructure megaprojects to stimulate economic growth, and infrastructure development and deepen regional integration in Eurasia and Africa. However, despite the declared benefits, these initiatives are characterised by several contradictions and challenges. Large-scale Chinese investments carry risks of debt dependence for recipient countries, as they are often provided on non-transparent and unfavourable terms. In addition, the implementation of megaprojects is accompanied by high corruption risks, a lack of proper accountability mechanisms, and limited involvement of local resources and companies. This minimises potential economic benefits for the countries involved and hinders technology transfer and local capacity development. Chinese infrastructure projects are also often associated with negative social and environmental impacts, such as forced resettlement of communities, ecosystem degradation, and pollution. To overcome these contradictions, recommendations have been developed to introduce mechanisms for transparency, accountability, active involvement of local companies and ensuring a fair distribution of economic benefits among all stakeholders. The practical significance of the study lies in the development of recommendations for optimising Chinese infrastructure megaprojects, given the interests of the participating countries, which can be used to improve cooperation strategies with China and ensure the sustainability, mutual benefit and inclusiveness of these initiatives

Information asymmetry in non-US stocks: The compounding and mitigating effects of tax havens and corruption

This study examines the role of a country's position as a tax haven and its corruption level in the information asymmetry of non-United States (U.S.) stocks listed on the New York Stock Exchange. Based on the findings, non-U.S. stocks from countries with more pronounced attributes of tax havens and corruption levels have a higher probability of information-based trading and lower market liquidity. Meanwhile, a deeper analysis into the individual attributes of tax havens reveals that the main drivers of these effects include weak anti-avoidance measures and legal complexities, with lesser effects from double tax treaties. In addition, the influence of a country's corruption level on information asymmetry primarily depends on its position as a tax haven, with the highest levels of information asymmetry occurring in jurisdictions that possess strong tax haven attributes and high corruption levels. The implication of the findings is that reducing the influence of global tax havens, especially in regions with high corruption levels, can enhance market liquidity, ultimately benefiting investors and contributing to the overall stability and efficiency of financial markets.

Post-war Recovery Practices for Ukraine, based on the Experience of other Countries that have Undergone Similar Processes

"This article aims to study the specifics of post-war recovery practices in European countries to elaborate on the key recommendations for Ukraine’s post-war reconstruction policy. The research methodology is based on general scientific and empirical methods of studying political, economic, social, and institutional factors of Ukraine’s recovery and similar practices of the most developed countries. The study results of post-war reconstruction practices in European countries prove the importance of building institutional norms, European integration (political, economic, ideological, and value-based), and mechanisms for financing development projects to create a new innovative model of economic growth and social welfare. Furthermore, the implementation of the Marshall Plan (European Recovery Program) and the Dodge Line (Recovery Program for Japan) prove the importance of creating capable institutions and their political cooperation with the affected countries to promote industrial growth and transition to post-industrial societies dominated by a significant share of the quaternary and quinary economy sectors. Practical relevance. The article’s authors analyzed the Recovery Plan of Ukraine compared with the reconstruction plans of European countries and Japan. The authors have identified the need for institutional support from international partners due to high corruption risks in Ukraine, the resource-based structure of the Ukrainian economy, and the need to stimulate economic development through investment, innovation, and building effective education, social security, and healthcare systems. Therefore, as part of Ukraine’s recovery policy, it would be reasonable to use mechanisms of institutional and political support from partners and economic development financing means to address the problem of institutional failure in Ukraine."

The Neighborhood Effect on Perceptions of Corruption: Comparative Spatial Autocorrelation Analysis

This article aims to investigate the factors influencing the perception of high corruption levels in a country and examines the potential existence of spatial dependence in the distribution of these factors. It specifically focuses on exploring the interdependence between the Corruption Perception Index (CPI) and forty four other factors categorized into six distinct categories. The central hypothesis posits that the interdependence between the CPI and these factors is more pronounced at the domestic level compared to its influence on indicators in neighboring countries. To assess the degree of interdependence between the CPI and each of the other indicators, the Pearson's Coefficient of Determination is employed, enabling an evaluation of corruption levels based on domestic state-specific factors. Furthermore, Moran's Bivariate Spatial Autocorrelation Index is utilized to elucidate the extent to which the CPI in one country influences one of the forty-four indicators in neighboring countries. Additionally, the Index of Spatial Interdependence is employed to ascertain the significance of domestic and international factors for each indicator. The research findings provide several noteworthy conclusions. Firstly, the neighborhood effect proves to be particularly significant for indicators that hold universal relevance for all governments, such as demographic and standard of living indicators. Conversely, indicators influenced by institutional, historical, and cultural differences exhibit stronger interrelations within the state. Lastly, the study establishes that the Pearson's Index holds greater significance than the Bivariate Moran's Index of Spatial Autocorrelation and the Index of Spatial Interdependence, thereby confirming the proposed hypothesis.

Entrepreneurship, Resource Rents and Institutions

Abstract The resource curse hypothesis supposes that rents generated by resource booms create opportunities for rent-seeking activities, which weaken innovation and economic development due to the potentially adverse effects in competitive markets. The quality of institutions is an important channel to transform society from a rent-seeking economy to an entrepreneurial economy. We address in this paper these channels by examining necessity, opportunity, productive and innovative measures of entrepreneurship. Using annual data from 2002 to 2017, we estimate the relationship between entrepreneurship and natural resource rents for 60 countries. Allowing for measures of institutions (corruption, government policies, and cultural and social norms) and real GDP growth, we find that natural resource rents have negative effects on productive and innovative entrepreneurship, especially in high-income countries. In threshold dynamic panels, entrepreneurial activities grow with higher levels of corruption (weaker institutions), with an interpretation provided based on the higher corruption in developing economies.

Integrating Block chain Technology to Harness Big Data: Methods, Obstacles, and Future Outlook

The distributed and secure nature of blockchain technology makes it an effective tool for combating corruption, increasing transparency, and streamlining processes across fields like healthcare, government, and finance. This research demonstrates that blockchain technology can revolutionize government transparency, financial management, and corporate structures. In nations with high corruption indices, combining blockchain with forensic accounting significantly enhances the openness and accountability of anti-corruption efforts. System integration challenges, legal constraints, a shortage of skilled professionals, and scalability issues hinder blockchain adoption from reaching its potential. Overcoming these obstacles requires further research, legal frameworks, and cross-sector collaboration. To enhance decision-making in a data-driven economy and maximize blockchain's potential, a governance model that integrates big data analytics with blockchain could enable secure, transparent, and scalable adoption