Corruption Epidemics

Citation

Becker S, Egger PH & Seidel T (2008) Corruption Epidemics. Stirling Economics Discussion Paper, 2008-09.

Abstract
When estimating the determinants of perceived corruption, economists assumed that there is full independence across countries. In the presence of peer-group or learning effects through cross-border economic activity (such as trade or labor migration), this assumption might be violated. We provide evidence that this is the case. Using a cross-section of 123 economies for the year 2000, we illustrate that corruption in one country spills over to adjacent economies. This finding implies that institutional changes reducing corruption in one country lead to smaller but qualitatively similar effects in neighboring countries.

Keywords
Perceived corruption; Institutions; Spatial econometrics; Political corruption Economic aspects; Corruption Economic aspects

JEL codes

• D72: Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
• D73: Bureaucracy; Administrative Processes in Public Organizations; Corruption
• K42: Illegal Behavior and the Enforcement of Law