BrodCorruption

BrodCorruption - Joe Broderick Page 1 Transition in...

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Joe Broderick Page 1 Transition in Corruption Econ 508: Dr. Fleisher March 9, 2005 Joe Broderick As children, people learn to follow rules. Yet another distressing lesson soon
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Joe Broderick Page 2 follows: breaking the rules often benefits a self-interested individual. When a toddler witnesses cookie jar theft, he receives a disturbing message: stealing increases personal pleasure, and only has bad consequences if one is caught in the act. Adults too are forced to choose between following societal rules and cheating for personal benefit. In general, the more power one possesses, the more opportunities and temptations present themselves. This paper will analyze the effects of corruption in countries striving to transition from a planned economy to a market economy. Corruption is commonly defined as “the misuse of public power for private profit.” (Worldbank.org) There are two general types of corruption: administrative corruption and state capture. Administrative corruption is when state officials distort the laws for personal gain or receive bribes for performing their duties. State capture occurs as powerful agents illegally influence state officials for preferential public treatment. 1 As corruption differs over countries and time periods, it is difficult to measure precisely as we would the amount of dollars invested each year. Most corruption occurs behind a veil of secrecy, created by powerful people with much to lose- therefore willing to go through much trouble to conceal corrupt activity. This lack of standardized measurement hampers the calculation of actual “corrupt” capital, goods, services, and laws. 2 Measuring corruption relies on surveys and polls given to citizens around the world. The World Bank ranks countries on the extent of administrative corruption and state capture, respectively: High-High, High-Medium, Medium-High, and Medium- Medium. (Worldbank.org) Transparency International releases the annual Corruption Perceptions Index (CPI), a country-specific metanalysis of four to sixteen surveys of business people and country analysts. It is a composite index, measuring the perceived 1 Pradhan: Chapter 5, pg 58-66. 2 Galtung (2): Pg. 2 (Overview).
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Joe Broderick Page 3 corruption among public officials. The CPI’s scale ranges from 1 (very corrupt) to 10 (very clean). Some countries do not have enough information to receive a score. For reference sake, in 2003 the United States received a 7.5, the19 th least corrupt of the 187 surveyed countries. Finland was the cleanest with a 9.7, while Bangladesh earned a dirty 1.3. As far as large transition countries, China received a 3.4 (66 th ), and Russia earned a 2.7 (86 th ). 3 Other quantitative scales are employed, such as the GCR, BEEPS, BI, etc. A correlation of 0.75 between the quantitative scales indicates high degree of reliability. Although corruption usually carries a negative connotation, economists have long
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BrodCorruption - Joe Broderick Page 1 Transition in...

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