Sources of Corruption: A Cross-Country Study

Abstract

Why is government corruption more pervasive in some societies than in others? In this article we examine public choice explanations that attribute corruption to a lack of competition in either political or economic arenas or both. The principal part of our analysis draws on recently-published data about levels of corruption for a broad cross-section of countries reported for the early 1980s. We supplement this with an additional analysis of a second dataset on corruption measured during the late 1980s. Our analyses confirm that political competition affects level of corruption, but this effect is nonlinear. Corruption is typically lower in dictatorships than in countries that have partially democratized. But once past a threshold, democratic practices inhibit corruption. However, we obtained mixed results with respect to the relationship of economic competition and corruption: government size does not systematically affect corruption, but membership of the Oil Producing and Exporting Countries (OPEC) does. Finally, corruption is more pervasive in low-income countries which tend to underpay public sector employees.