Economics of corruption

Economics of corruption applies economic tools to the analysis of corruption. Rigorous study of corruption by economists commenced in the 1980s.

History of the discipline 
In 1968, Nobel laureate economist Gunnar Myrdal found corruption 'almost a taboo (among economists) as research topic'. Indeed, it has mostly been a matter of political science and sociology. However, the scenario changed since the 1970s. Since Rose-Ackerman's article "The Economics of Corruption", published in the Journal of Public Economics in 1975, more than 3,000 articles have been written with 'corruption' in the title, at least 500 of which directly focus on different aspects relating to corruption using an economic framework. Some books have also been published on the subject.

Organizations have emerged to deal with the economics of corruption. Some universities offer courses under the title Economics of Corruption. Nobel laureate economist Gary Becker and an American Judge Richard Posner have opened a blog for open public discussion discussing economics of corruption

Books on economics of corruption
Some books have been produced with the specific title of "economics of corruption". One of these is The Economics of Corruption edited by Ajit Mishra published by the Oxford University Press in 2005. This book is an anthology of 11 essays under 4 categories, written by 16 economists. The titles of the essays give an idea of the various approaches taken by different economists. They are quoted below :
 Corruption : an Overview
 Corruption : Its causes and Effects
 Hierarchies and Bureaucracies: On the role of Collusion in Organizations
 A Theory of Misgovernance
 Pervasive Shortages under Socialism
 Corruption and Growth
 Corruptible Law Enforcers : How should they be compensated?
 Notes on bribery and control of corruption
 The Choice between Market failures and corruption
 Rents, Competition and corruption
 Electoral competition and Special Interest Politics

One can observe that these essays do not capture corruption in all its economic essence. Hundreds of essays have been published during the last two decades that deal with many more aspects of corruption from an economic perspective. Some other books are :
 Rose-Ackerman, S. : Corruption - A study in Political Economy, 1978, Academic Press, New York.
 Ekpo, M. U. (ed.) : Bureaucratic corruption in sub-Saharan Africa, 1979, University Press of America, Washington.
 Noonan, J. T. Bribes, 1984, Macmillan, New York.
 Chowdhury, F. L. Corrupt Bureaucracy and Privatization of Tax Enforcement, 2006, Pathak Samabesh, Dhaka.

Courses on economics of corruption
Some universities and institutions including the University of Regina in Canada, Florida State University in the United States and the University of Passau in Germany have started to offer courses on economics of corruption. Additionally, the University of Rochester offers a course related to the history of economic corruption. One of the course outlines is given below. The course is offered by New Economic School, an institution in Russia. The course includes 14 lectures, the themes of which are as follows.

1. Corruption as an economic, social and political problem. Corruption's specific features in economies in transition.
2. Corruption and rent-seeking behavior. Basic model of rent-seeking and its research. Problem of rent's dissipation.
3. Static and dynamic models of Rent-seeking. Cases of pure and mixed public goods.
4. Rent-seeking behavior and free-riding. Rent-seeking in teams.
5. Rent-seeking in hierarchical systems.
6. "Artificial" rents and seeking for them.
7. Examples when rent-seeking arises in economies. Criminal rent-seeking.
8. Basil model of corruption and its analysis. Corruption models' classification.
9. Game-theoretical approaches towards corruption.
10. Corruption in hierarchical structures.
11. Dynamic corruption models.
12. Economic systems with corruption efficiency.
13. Statistical and econometrical approaches towards research of corruption.
14. Macroeconomics aspects of corruption. Problems in estimation of corruption influence on economic development.

Evidently, the course has limited focus and in many ways do not directly address relevant areas of corruption which have already been analyzed from an economic perspective.

Approaches to economic analyses of corruption
As indicated above, a systematic pattern in research on corruption from economic perspective is yet to emerge. However, Ananish Chaudhuri has classified the foci of economic analyses of corruption into fourteen broad categories. These are:

 Economic causes of corruption
 Rent-seeking in the public offices, including Judiciary
 Corruption as an economic behavior, e.g. game theoretic explanation
 Demand for and Supply of corruption, optimal level of corruption, optimal level of bribery, efficiency of the market in corruption
 Impact of corruption on the competitiveness in the market for goods and services
 Measurement of the level of corruption, comparative county-studies
 Corruption in different economic activities, e.g. public procurement, defense procurement
 Sources of corruption: Revenue collection, Foreign aid, Foreign Direct Investment
 Corruption in the private sector, Economies in transition
 Impact of corruption on economic growth, national development and the level of poverty
 Welfare impact of corruption, Income redistribution resulting from corruption
 Factors affecting corruption, e.g. Shadow economy, Smuggling, weak state, corruption by politicians
 Relation between corruption on the one hand and other economic-social-cultural aspects like technological progress, environment and ecology,
 Economic factors relating to anti-corruption programs, e.g. optimal level of punishment for corruption etc.

References

Category:Corruption
Category:Public economics