Corruption
THE CAUSES OF CORRUPTION: A CROSS-NATIONAL STUDY
Why is corruption—defined here as the misuse of public office for private gain—perceived to be more widespread in some countries than others? Different theories associate cross-national variation in the extent of corruption with particular historical and cultural traditions, levels of economic development, political institutions, and government policies. This paper analyzes which of various plausible determinants are significantly related to an index of “perceived corruption” compiled from business risk surveys for the mid-1990s. Using 2SLS to reduce problems of endogeneity and a variation of Leamer’s “extreme bounds analysis” to test for robustness, it finds three factors robustly significant. Countries that were more economically developed and those which are former British colonies were rated “less corrupt”. Those which have a federal structure were “more corrupt”.
Daniel Treisman Assistant Professor Department of Political Science University of California, Los Angeles 4289 Bunche Hall LA CA 90095-1472 Treisman@polisci.ucla.edu
©
First Draft September 1997 Revised April 1998
I. INTRODUCTION Why is corruption—defined here as the misuse of public office for private gain—perceived to be more widespread in some countries than others?1 Understanding this is important for several reasons. Corruption has been blamed for the failures of certain “developing” countries to develop, and recent empirical research has confirmed a link between higher perceived corruption and lower investment and growth (Mauro 1995; World Bank 1997). Political scandals have sparked public outrage against political corruption in countries across the globe during the last few years, and in every continent at least one incumbent regime has been forced out of office under a cloud. At the same time, corruption is viewed as one of the main obstacles that post-communist countries face in attempting to consolidate democratic institutions
Why is corruption—defined here as the misuse of public office for private gain—perceived to be more widespread in some countries than others? Different theories associate cross-national variation in the extent of corruption with particular historical and cultural traditions, levels of economic development, political institutions, and government policies. This paper analyzes which of various plausible determinants are significantly related to an index of “perceived corruption” compiled from business risk surveys for the mid-1990s. Using 2SLS to reduce problems of endogeneity and a variation of Leamer’s “extreme bounds analysis” to test for robustness, it finds three factors robustly significant. Countries that were more economically developed and those which are former British colonies were rated “less corrupt”. Those which have a federal structure were “more corrupt”.
Daniel Treisman Assistant Professor Department of Political Science University of California, Los Angeles 4289 Bunche Hall LA CA 90095-1472 Treisman@polisci.ucla.edu
©
First Draft September 1997 Revised April 1998
I. INTRODUCTION Why is corruption—defined here as the misuse of public office for private gain—perceived to be more widespread in some countries than others?1 Understanding this is important for several reasons. Corruption has been blamed for the failures of certain “developing” countries to develop, and recent empirical research has confirmed a link between higher perceived corruption and lower investment and growth (Mauro 1995; World Bank 1997). Political scandals have sparked public outrage against political corruption in countries across the globe during the last few years, and in every continent at least one incumbent regime has been forced out of office under a cloud. At the same time, corruption is viewed as one of the main obstacles that post-communist countries face in attempting to consolidate democratic institutions
References: calculated from World Bank, World Development Report 1996, pp.218-9, 188-9. Leamer (1988), pp. 180-83. calculated from Sachs and Warner (1995) Instituted for Management Development World Competitiveness Report Schiavo-Campo et al. 1997 Evans and Rauch 1997 Banks 1994 (as presented in Easterly and Levine 1997 's data set) La Porta et al. 1997b Gunnemark 1991, as presented in Eaasterly and Levine 1997 's data set Atlas Narodov Mira, as presented in Mauro 1995 Elazar 1995 and CIA World Factbook 1996 logarea Proportion of population affiliated Catholics Catholic Percent of population affiliated with "strongly hierarchical religions" (Catholic, Muslim, Eastern Orthodox) as of 1980. (Following La Porta et al. 1997a.) hierreli Barrett 1982 Barrett 1982