IV. Factors Behind Differential - 1

IV. Factors Behind Differential

Incidence and Persistence
We now turn to the question of why
the incidence of corruption is so palpably
different in different countries and
the related question of why in some
cases corruption is so persistent. Liberal
economists, of course, have an easy
answer to this: it is the regulatory state
with its elaborate system of permits and
licences that spawns corruption, and
different countries with different degrees
of insertion of the regulatory state
in the economy give rise to varying
amounts of corruption. This explanation
is no doubt valid to a large extent, but
inadequate. It cannot, for example, explain
why corruption, in the judgment
of many perceptive observers, may have
increased in post-Communist Russia or
in China after the onset of the market
reforms in recent years. Comparing
across countries in Appendix Table 1
(based on the Business International
survey data for the early 1980s), it cannot
explain why corruption is supposed
to be so much more in Mexico than in,
say, South Korea or Taiwan in the early
1980s (when in the latter countries the
state was not much less interventionist
than in Mexico).