Economic analysis of corruption in developing countries

Corruption which can be defined as the misuse of public office or resources for private benefit has recently, especially in the decade of 1990's attracted a great of attention around the world. Corruption is a complex phenomenon and widespread in many developing countries. The purpose of this dissertation is to study corruption problem in 68 developing countries. In the first part of the study, definitions, measurement, scope, classifications, types, impacts and consequences of corruption are analyzed. Schools of thought on developing countries corruption are also presented. In the second part, economic, political and socio - cultural causes of corruption are discussed. Two models of corruption, namely economic factors and social factors are developed. A set of hypotheses are proposed and tested. Test results show that economic factors such as level of per capita income, openness, public sector wage rate and extent of state control of economy (measured by economic freedom index) are negatively related to corruption. Tests results also reveal that political and socio - cultural factors such as rule of law, democracy, index of ethnic fractionalization are negatively related to corruption but bureaucracy - red tape is positively related. In the last part, micro and macro anti - corruption strategies for combating corruption in developing countries are examined.