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Economics > Corruption > Flashcards

Corruption Flashcards

1
Q

Define Corruption

A

Power of public office used for personal gain that contravenes the rules of the game

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2
Q

What are the 2 types of corruption?

A

Petty

Grand

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3
Q

What is Petty Corruption?

A

Bribe is paid to a lower hierarchy bureaucrat to provide or speed up a service

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4
Q

What is Grand Corruption?

A

involves large payments to higher ranks

e.g. Bribes for Public contracts

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5
Q

Why is it difficult to measure corruption?

A

Lack of Data/Reliable data
There are many different forms of corruption
Corruption is done in Secrecy

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6
Q

What should a good corruption measure be able to determine?

A

Quality of underlying Institutional Framework

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7
Q

What are the 3 main Corruption measures?

A

Corruption Perception Index (CPI)- by Transparency International
Control of Corruption- World Governance Indicators (W.B)
Bribe Payers Index- by Transparency International

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8
Q

What is the Corruption Perception Index?

A

Aggregate measure based on Perceptions of Business people + country Experts
0-100–> Corrupt-Clean
Data since 1995

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9
Q

What is the Bribe Payers Index?

A

Measures Perceived likelihood of companies from major economies to pay bribes abroad
Survey-based measure
0-10–> 10=Countries never bribe abroad

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10
Q

Why is it important NOT to use Objective data?

A

At an International level- Different legal definitions
-Different Statistical Methodologies of data aggregation
Measure would reflect Efficacy of State’s Judiciary- NOT prevalence of Corruption

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11
Q

What are the 3 necessary conditions for Corruption?

A

Discretionary Power
Economic Rents
Weak Institutions

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12
Q

What is Discretionary Power?

A

Public officials must possess Authority to design/administer Regulations + Policies in a Discretionary (secretive) manner

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13
Q

What are Economic Rents?

A

Discretionary Power must allow Extraction of Existing or New Rents

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14
Q

What are Weak Institutions?

A

Political, Administrative + Legal institutions must create incentives for Public Officials to use their Discretionary power to extract or create rents

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15
Q

What factors can be used to Reform Corruption?

A

Democracy
Freedom of Press
Improve Quality of Judiciary

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16
Q

What is the Causality question for corruption?

A

Weak Institutions–> Corruption–> Poor Economic Outcomes?

Poor Economic Outcomes–> Corruption–> Weak Institutions?

17
Q

What CPI show about the Consequences of Corruption?

A

Strong Negative Correlation between Corruption + GDP/capita

18
Q

how does Corruption lead to Lower GDP

A

Corruption–> Economic Rents–> Inefficient Economic policies–> Lower GDP- Poverty Trap

19
Q

How do Higher Income levels lead to Lower Corruption?

A

High Income levels–> Increased determination to fight Inefficiencies–> Lower Economic Rents–> Lower Corruption

20
Q

In the S/M Run, what happens with Corruption + Income?

A

If country in a bad equilibrium- Corruption + Income feed off each other- Corruption worsens
If country in a good equilibrium- Corruption + Income feed off each other- Corruption falls

21
Q

In the LR what is the cause of corruption?

A

Income–> Corruption

22
Q

What is the association between Corruption + GDP/capita & Corruption + GDP/capita Growth?

A

Corruption + GDP/capita- STRONG

Corruption + GDP/capita- WEAK

23
Q

How are High Corruption levels associated with Gov. Services, Expenditure + Revenues?

A

Inefficient Gov. Services + Low-quality Public Healthcare
Low Gov. Spending on Education + Increased Spending on Military
Reduced collection of Tax Revenues- mostly Direct Taxes

24
Q

How are International Investors + Exporters affected by corruption?

A

Some exporters more willing to offer bribes than others

Investors from corrupt countries less sensitive to Corruption

25
Q

What is the Corruption Equation?

A

Corruption = Monopoly + Discretion - Accountability

26
Q

How can Init-Corruption Policies be used to reduce Corruption?

A

Target: -Monopolies

  • Discretion
  • Accountability
27
Q

How can targeting Monopolies help Reform corruption?

A

Increase Privatisation- Increase Competition–> Lower Monopoly Power
Make Contracts public knowledge

28
Q

How can Discretion be targeted to reform corruption?

A

Clarify Rules of the Game- Reduce Ambiguity + Discretion

Simplify Procedures + make rules available online

29
Q

How can Accountability be targeted to reduce corruption?

A

Measure Public Office performance + offer rewards
Improve Oversight by Public, Businesses + NGOs
Allow External Auditing
Provide better incentives to perform in Public Interest

Economics (20 decks)

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