Publication Type

Journal Article

Version

submittedVersion

Publication Date

1-2009

Abstract

We investigate the relationship between corruption and political stability, from both theoretical and empirical perspectives. We propose a model of incumbent behavior that features the interplay of two effects: a horizon effect, whereby greater instability leads the incumbent to embezzle more during his short window of opportunity, and a demand effect, by which the private sector is more willing to bribe stable incumbents. The horizon effect dominates at low levels of stability, because firms are unwilling to pay high bribes and unstable incumbents have strong incentives to embezzle, whereas the demand effect gains salience in more stable regimes. Together, these two effects generate a non-monotonic, U-shaped relationship between total corruption and stability. On the empirical side, we find a robust U-shaped pattern between country indices of corruption perception and various measures of incumbent stability, including historically observed average tenures of chief executives and governing parties: regimes that are very stable or very unstable display higher levels of corruption when compared with those in an intermediate range of stability. These results suggest that minimizing corruption may require an electoral system that features some re-election incentives, but with an eventual term limit.

Keywords

corruption, electoral system, empirical analysis, governance approach, incentive, party politics, political instability, political theory, theoretical study

Discipline

International Economics | Political Economy

Research Areas

International Economics

Publication

Economics and Politics

Volume

21

Issue

1

First Page

42

Last Page

92

ISSN

0954-1985

Identifier

10.1111/j.1468-0343.2008.00335.x

Publisher

Wiley

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1111/j.1468-0343.2008.00335.x

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