Political environment a ground for public sector corruption? Evidence from a cross-country analysis

Kumara, Ajantha Sisira and Handapangoda, Wasana Sampath (2014): Political environment a ground for public sector corruption? Evidence from a cross-country analysis.

Abstract

This study employs the instrumental variable two-stage least squares regression approach for the data for 121 countries to explore the impact of a country’s political environment on its level of corruption. The study provides strong evidence that a higher degree of rule of law, press freedom, readiness and capacity to handle e-governance practices, and urbanization are associated with a lower level of public sector corruption across all 121 countries. The colonial dummies and having a presidential government are found to be valid instruments for rule of law in addressing the issue of endogeniety embedded in it. Further, to a certain degree, landlocked countries are relatively more corrupt than costal countries. Finally, policy implications are discussed based on the findings of the study.

• Item Type: MPRA Paper
• Language: English
• Keywords: Corruption, Political Environment, Endogeniety, Public Sector
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law

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