Abstract
In this chapter, we contextualize and discuss the issue of defining corruption, endorsing a definition that focuses on the abuse of power. We also discuss how limiting the scope of corruption to the public sector contradicts the understanding that is common in the public and also in the economic science. Furthermore, we show how policies that are based on a concept of corruption that narrowly ascribes the phenomenon to the public sector , can reach simplistic conclusions such as that the extent of the public sector is invariably positively correlated with the occurrence of corruption. Such conclusions might drive policies that cannot satisfactorily address the problem of corruption, are conceptually flawed and are not backed by empirical analysis that enquired into the relation between the public sector and corruption. In this context, we also scrutinize the proposition that there is an evident trade-off between market failure s and corruption. On the contrary, anticipating one of the main conclusions of this book, we argue that corruption is one of the causes of the persistence of market failure s. The abuse of power for private gains in the case of environmental policies is an egregious example of how public institutions fail in dealing with issues that cannot be solved solely by market mechanisms because of corruption. Finally, the chapter also contains a discussion of basic concepts used throughout the book and of issues related to the measurement of corruption .
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Notes
- 1.
“Corruption.” Meriam–Webster online, 6 November 2007.
- 2.
As Jain states, “one of the difficulties in studying corruption lies in defining it. While it may appear to be a semantic issue, how corruption is defined actually ends up determining what gets modelled and measured” (2001, p. 73).
- 3.
In any case, the occurrence of corruption is often sanctioned by the law; in other words, often the act of corruption is a crime. In economics, a large literature has developed starting from the seminal work of Becker (1968) on crime and punishment. The application of such literature to the case of corruption is limited on the one hand by the fact that not all corruption is illegal. On the other hand, the case of corruption is peculiar because there is evidence that in some countries enforcement agents—the institutions in charge of punishment—are the worst offenders with respect to corruption, which limits the straight application of crime models (e.g. Pellegrini 2007). The inclusion of corruption in models of economics of crime can produce predictions quite opposite to the standard prescription of increased punishment and monitoring to decrease crime (e.g. Kugler et al. 2005).
- 4.
Corruption itself can determine which and how many laws are passed and the roman historian Publius Cornelius Tacitus noted—as early as in the first century AD—that “now bills were passed, not only for national objects but for individual cases, and laws were most numerous when the commonwealth was most corrupt” (Annals, Book 3, Chap. 27). It is interesting to note that the current Italian prime minister—Silvio Berlusconi—has been charged of creating laws ad personam; i.e. he has been charged of creating specific laws to safeguard the specific interests of one individual. The beneficiaries of such legal measures include the prime minister himself and other close associates that now cannot be prosecuted in numerous corruption-related trials.
- 5.
See Cinzia Sasso, “Borrelli e gli inediti di Craxi: Volevano frenare Mani pulite” Repubblica, 7 December 2007. http://ricerca.repubblica.it/repubblica/archivio/repubblica/2007/12/07/borrelli-gli-inediti-di-craxi-volevano-frenare.html, 25 May 2009.
- 6.
http://www.transparency.org/news_room/faq/corruption_faq, 3 June 2009. For Danida’s definition see http://www.um.dk/en/menu/DevelopmentPolicy/AntiCorruption/, 3 June 2009.
- 7.
Similar definitions are also available in the encyclopaedia: “Improper and usually unlawful conduct intended to secure a benefit for oneself or another. ‘Corruption’”. Britannica Concise Encyclopedia. 2007. Encyclopædia Britannica Online, 6 November 2007.
- 8.
It is also a definition that is coherent with the measures of corruption used in the empirical analysis in the rest of the thesis.
- 9.
The point is made in Williams 1999, p. 511.
- 10.
In this approach, standards developed by a particular type of society (i.e. the western society) are assumed to be the ideal and are employed to set the standards against which we can measure progress of any society. In the case of corruption, the model would be the working of western rich democracies and their understanding of duty and morality.
- 11.
We highlight that the indexes of corruption that we use throughout the thesis are aggregations of indexes coming from various sources. These sources include citizens’ opinion polls and international experts’ surveys and the high correlation in the original indexes indicates that cultural ambiguities with respect to the concept of corruption are not a serious issue (Kaufmann and Kraay 2007, p. 22).
- 12.
Familism and patronage are other forms of corruption where the duty is subverted not for immediate gain, but for allegiances to special networks. Of course, belonging to the network and contributing to it can ultimately lead to personal advantages.
- 13.
Similarly, a distinction can be made between grand and petty corruption. Grand corruption involves high level bureaucrat or politicians, for example it occurs when a sizeable payment is made to secure a large procurement contract (Rose-Ackerman 1999, p. 27). Petty corruption involves small payments to people at low level of hierarchies (see Lambsdorff 2005).
- 14.
See also Bardhan (2006) who has similar and additional categorizations.
- 15.
Cf. Lambsdorff 2008 and http://www.transparency.org/news_room/faq/corruption_faq, 3 June 2009.
- 16.
- 17.
This is not to say that privatization of state enterprises should not have taken place, on the contrary we mean that the potential benefits of the privatization process were lost because of the way the process was mismanaged (Black et al. 2000).
- 18.
For an overview of the corruption problems related to healthcare in Italy, see Paolo 2008; for some of the most recent cases see http://www.repubblica.it/2008/06/sezioni/cronaca/medici-arrestati/medici-arrestati/medici-arrestati.html, 14 June 2009.
- 19.
- 20.
One example of a survey—included among the sources of our corruption indexes— containing such a variable is the “World Business Environment Survey” of the World Bank, available at http://info.worldbank.org/governance/wbes/.
- 21.
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Pellegrini, L. (2011). Economic Analysis of Corruption. In: Corruption, Development and the Environment. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-0599-9_2
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