Corruption regularly makes front page headlines: public officials embezzling government monies, selling public offices, and trading bribes for favors to private companies generate public indignation and calls for reform. In the following video Prof. Ray Fisman exlain what corruption is and why it is so damaging politically, socially, and economically. Even more importantly he explains what we can do as economists to fight corruption.
Economics of corruption deals with the misuse of public power for private benefit and its economic impact on society. Economies that are afflicted by a high level of corruption are not capable of prospering as fully as those with a low level of corruption. Also, economies that are corrupted cannot function efficiently. As a consequence, corruption leads to an inefficient allocation of resources, poor education and healthcare, just to cite soem examples. Moreover, corruption fosters the presence of illegal activities as well as unreported income from the production of legal goods and services for which taxes should be paid, but are not.
Please answer the following questions based on Svensson (2005). Eight questions about corruption.
In the following video, professor Edward Miguel present his book (joint with Raymond Fisman, see above) Economic Gangsters. Fisman and Miguel use economic reasoning to get inside the heads of these “gangsters,” and propose solutions that can make a difference to the world’s poor — including cash infusions to defuse violence in times of drought, and steering the World Bank away from aid programs most susceptible to corruption.
Fisman and Miguel offer ingenious ways to measure and understand the drivers of corruption. They look at stock exchange prices of major Indonesian corporations close to former President Suharto to try to identify how much money his family might have purloined. They compare parking violations by different countries’ diplomats in New York with global corruption rankings, to try to isolate ‘cultural’ propensities towards corruption. They ask whether increased police salaries in Kenya simply make corrupt police officers richer.
Please answer the following questions before proceeding.
Finally, I ask you to surf the website Transparency International. Transparency International is a global movement working in over 100 countries to end the injustice of corruption. Between may different useful resources, you can find a description of the Corruption Pereceptions Index (CPI) that scores and ranks countries/territories based on how corrupt a country’s public sector is perceived to be by experts and business executives.
This website may be a good source of inspiration for finding interesting ideas to study and reflect on the difficulties to find data that can answer your research questions.
Below an interview with Nikolaj Harmon, Associate Professor of Economics at the University of Copenhagen. Nikolaj talks about his research on curruption. See a summary of his paper here. Nikolaj is not only a outstanding researcher but also a great teacher (in case you are interested, he will teach Political Economics in Fall).
Summary of Module :
- Measuring corruption is complex
- Experimentation can reveal successes and failures in policy interventions
Suggested movie for tonigh: Inside Job (2010)