Corruption in Developing Countries

Abstract

Recent years have seen a remarkable expansion in economists' ability to measure corruption. This, in turn, has led to a new generation of well-identified, microeconomic studies. We review the evidence on corruption in developing countries in light of these recent advances, focusing on three questions: how much corruption is there, what are the efficiency consequences of corruption, and what determines the level of corruption. We find robust evidence that corruption responds to standard economic incentive theory, but also that effects of anti-corruption policies often attenuate as officials find alternate strategies to pursue rents.

Corruption and management practices: Firm level evidence

“…Corruption is particularly severe in this region, based on the ICRG (International Country Risk Guide) data, the measure of controlling corruption within the political system is 2/5 compared to a world average of 2.5/5 in 2009. There is a discussion in the corruption literature on whether national or regional corruption is the most appropriate unit to measure corruption (Olken and Pande, 2012). The effect of corruption on firms may occur at either of these units, and which unit matters the most has not been determined.…”

Aspects of Moral Change in India, 1990–2006: Evidence from Public Attitudes toward Tax Evasion and Bribery

“…Tolerance for tax evasion and bribery are only two of the many aspects of moral values, but they are of special public concern in India and elsewhere because of implications on economic development (Bardhan, 2006;Olken & Pande, 2012). As a free rider problem, tax evasion reduces the public funds available for the development of public goods such as law and order, infrastructure, transportation, education, and health.…”

Chinese aid and local corruption

“…Olken and Pande, 2012). However, Foltz and Opoku-Agyemang (2015) find that increased police salaries in Ghana increased corruption.…”