Public Administration: Corruption

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How does corruption come about within an organization? Explain in detail.

The work of Montinola and Jackman (2002) is important here. Since this question and the next are tightly related, I will not give the same answer twice. First, moderate political competition is a source. In other words, in a society that is not entirely democratic or entirely authoritarian has a greater chance of suffering with corruption. In general, democracy hurts corruption, but not if it's halfway.

Oddly, the size of the state is a cause for corruption only when it is small. This goes against much of the literature on Africa that says the opposite: a swollen state is both the cause and effect of corruption.

A lack of dynamism is another source. In economic terms, a stagnant economy gives greater incentives for corruption. This also means that, as the economy grows, corruption decreases (more on that below). There are many studies dealing with that connection. Corruption and economic performance are probably the only two areas where the articles in this field agree.

Another strange source in the Montinola and Jackman study is OPEC. These oil producing states are usually more corrupt than similar societies elsewhere. This can be extrapolated to mean that a) corruption begins with an economy dependent on one or two exports, and b) that the state plays a great role in regulating those one or two sectors. More generally, the argument is that a cartel is corrupt in itself, hence, any cartel is automatically corrupt.

In Latin America, austerity measures have increased corruption. This goes against much literature in this field. In Argentina, Peru and Uruguay, reductions in public expenditure, lowering taxes and freeing trade increased levels of corruption in these societies.

In Gerring and Thacker (2004), they argue that political democracy hurts corruption. In other words, the lack of democracy is one of the causes of official misconduct. They isolate several variables that are significant in creating a culture of corruption. These include:

1. The power a state has over its population (as opposed to federalized structures). A decentralized state empowers the judiciary at the local level to take action against corruption, but the authors only give a little credence to this (see #4).
2. The strength of the presidency is also important, since the president is more liable to worry about the common good than a legislative member, since he is only accountable to his district.
3. Divided government is a factor. If agencies that enforce anti-corruption measures are fighting among themselves, the chances for corruption increase.
4. Centralized bureaucracies are often less corrupt than decentralized ones. This is because in centralized systems, turnover and intra-departmental change is high, meaning that client networks become more difficult to sustain. In sum, the clearer the chain of command, the less corruption.
5. Weak parties might also cause corruption. Parties exercise discipline over their members for the sake of the party's reputation. The party can finance campaigns, etc. Without this, the candidate must get his money elsewhere.
6. As control variables, Gerring and Thacker include free trade, GDP growth, mineral wealth, legal regime, labor, democracy and diversity. Diversity reduced corruption. The more diverse a population, the less communal ties will function. Mineral wealth increases corruption to the extent a country is dependent upon it. Low rates of labor productivity might also be a cause. Democracy harms corruption, as does a strong legal code, free trade and a growing economy. Finally, the percentage of family farms is also correlated with low corruption. Mega-farms breed corruption, while smallholders decrease it.

What conditions must exist, or what factors allow corruption to seep into public organizations? Explain in detail.

One very important idea here is low salaries. In Old Russia and parts of Africa, bureaucrats are sometimes forced to take bribes to make ends meet. Another is the lack of competition in a certain sector. If that sector is highly regulated, then bureaucrats have incentives to act badly, extracting rents for the near-monopoly position of the few firms involved (see below for the concept of "rents"). Put differently, when a state bureaucracy has a great deal of control over a sector with little competition, they can then be bought off to leave the companies alone. Control acts as a lever to extract resources.

The size of the ...