This paper asks whether corruption might be the outcome of a lack of outside options for public officials or civil servants. We propose an occupational choice model embedded in an agency framework to address the issue. We show that technology-induced private sector expansion leads to a decline in publicly supplied corruption as it provides outside options to public officials who might otherwise engage in corruption. We provide empirical evidence that strongly shows that technology-induced private sector development is associated with a decline in aggregate corruption. This suggests that the decline in publicly supplied corruption outweighs the potential increase in privately supplied corruption that could result from private sector expansion.The only corruption data that cover a long time span are prepared by the Political Risk Services group published in the International Country Risk Guide (ICRG), and also available from the World Development Indicators (W DI)a We use theanbsp;...
|Title||:||Corruption and Technology-Induced Private Sector Development|
|Author||:||Jean-François Ruhashyankiko, Mr. Etienne B. Yehoue|
|Publisher||:||International Monetary Fund - 2006-08-01|