Headlines reading “Corruption Means the Poor Stay Poor in Oil-Rich State”[3] or “Millionaire Mullahs”[ 4] have become all too common. In fact, one is often hard pressed to pick up a reputable newspaper without some sort of corruption story on the politics, business, or even the sports pages. In countries developed and developing, large or small, market-oriented or otherwise, prominent politicia...

In just a few months in early 1997, Mexico fired its top drug-enforcement official for accepting bribes and ultimately closed the agency because it was so ridden with corruption; Ukraine’s president once again declared war on corruption; Chinese Prime Minister Li Peng lamented that his country was losing ground in its war on corruption; President Kim Young Sam deplored endemic corruption in Sou...

This paper presents a model of the interaction between corrupt government officials and industrial firms to show that corruption is antithetical to competition. It is hypothesized that a government agent that controls access to a formal market has a self-interest in demanding a bribe payment that serves to limit the number of firms. This corrupt official will also be subject to a detection tech...

This paper develops a simple framework to analyze the links between corruption and the unofficial economy and their implications for the official economy. In a model of self-selection with heterogeneous entrepreneurs, we show that the entrepreneurs’ option to flee to the underground economy constrains a corrupt official’s ability to introduce distortions to the economy for private gains. The un...

From Izindaba’s own observations while probing the rural doctor staffing crisis in late 2006 and visiting the foreign workforce management programme (FWMP) offices of the health department in Pretoria, this probe will continue to impact negatively on foreign doctor placements. The deputy director was officially suspended in early April when allegations of the ‘cash for jobs’ scam first emerged....

a n wa r s h a h 7 A lthough statistics on corruption are often questionable, the data suggest that corruption accounts for a significant proportion of economic activity. In Kenya " questionable " public expenditures noted by the controller and auditor general in 1997 amounted to 7.6 percent of GDP. In Latvia a recent World Bank survey found that more than 40 percent of households and enterpris...

Corruption often creates a “briber’s dilemma”: each of the “clients” competing for a rent allocated by a government official has an incentive to pay bribes to try to obtain preferential treatment, but they would all be better off if they could mutually commit not to pay bribes. This paper uses a model of linked games to show how informal relationships among the clients may enable them to enforc...

We study the quality of politicians when groups attempt to exert influence on policies by using both bribes (plata, Spanish for silver and money) and the threat of punishments (plomo, Spanish for lead). Contrary to the case in which groups use only bribes (as is traditional in the literature) and more capture does not damage the equilibrium quality of politicians, in the general case where also...

This paper provides a simple model of corruption dynamics with the ratchet effect. Corrupt officials have ex post the incentive to price discriminate entrepreneurs based on the entry decisions made in an earlier period. The inability of government officials to commit to future money demands induces entrepreneurs to delay entry in order to receive a discount in the permit price later. Even thoug...

This paper provides a simple model of corruption dynamics with the ratchet effect. Corrupt officials have ex post the incentive to price discriminate entrepreneurs based on the entry decisions made in an earlier period. The inability of government officials to commit to future money demands induces entrepreneurs to delay entry in order to receive a discount in the permit price later. Even thoug...