4 Behind the Investment Climate: Back to Basics—Determinants of Corruption Veronica Alaimo, Pablo Fajnzylber, J. Luis Guasch, J. Humberto Lopez, and Ana Maria Oviedo Previous chapters discussed the...

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Answered Same DayDec 23, 2021

Answer To: 4 Behind the Investment Climate: Back to Basics—Determinants of Corruption Veronica Alaimo, Pablo...

David answered on Dec 23 2021
116 Votes
At lower levels of democracy corruption tends to be lower in dictatorships than in partially democratic
countries. However at higher levels of democracy corruption declines due to democratic
practices.
According to Freedom House, Brunetti and Weder (2003), free press appears to deter corruption. Their
argument is that free press can play a decisive role in arresting corruption. Free press can be an effective
overseer if they are provided with the right incentives. In the poorer countries the public sector
employees are paid poorly and as a result they have weaker on-sight institutions. The researchers find
that higher value is attached to the officers who have a college degree or have entered the civil service
through a formal examination. However when they lay their claim on income, rauch and evans find that
the merit based system gives rise to corruption.
According to others low institutional capacity and quality of distortions gives rise to corruption. The
quality of judiciary lowers the level of corruption. The extent to which the public procurement is open to
foreign bidders and the extent to which there is equal fiscal treatment of all enterprises, both contribute
to higher levels of corruption even when the other variables are put on hold by the authors. The degree
of involvement of the government as measures by the size of GDP is also an indicator of level of
corruption. The rent seeking activities by the government gives rise to corruption. The number of public
officials convicted for public abuse have a positive correlation with the per capita total expenditures of
the local government. Overall share of GDP is also positively related to the corruption levels.
Competition also reduces the rent seeking activities. It reduces the motives of public officers to capture
a share of rent through extortion and corruption. In the above regard Ades and Di Tella...
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