The Institutional Economics of Corruption and Reform
Theory, Evidence and Policy

This book shows how institutional economics can be used to better understand corruption and reform.

Johann Graf Lambsdorff (Author)

9780521068673, Cambridge University Press

Paperback / softback, published 10 July 2008

304 pages, 5 b/w illus. 8 tables
22.9 x 15.2 x 1.7 cm, 0.45 kg

Review of the hardback: 'Johann Graf Lambsdorff is the man behind the Corruption Index from Transparency International. It is reported – often with lurid headlines – across the world every year when it is issued. A government loves it when its country rises even a few steps up towards honesty, and the opposition and many journalists love it when their country descends even a few steps down towards corruption. With such fame and notoriety everything that is known and written about corruption descends upon Johann Graf Lambsdorff, and this book is his summary and thoughts after twelve years of the TI index. The book is first of all a detailed and thoughtful survey of the evidence and the literature. It is also a strong plea for a more honest world, with very insightful discussions of a broad range of proposals for reform.' Martin Paldam, Professor of Economics, University of Aarhus, Denmark

Corruption has been a feature of public institutions for centuries yet only relatively recently has it been made the subject of sustained scientific analysis. Lambsdorff shows how insights from institutional economics can be used to develop a better understanding of why corruption occurs and the best policies to combat it. He argues that rather than being deterred by penalties, corrupt actors are more influenced by other factors such as the opportunism of their criminal counterparts and the danger of acquiring an unreliable reputation. This suggests a novel strategy for fighting corruption similar to the invisible hand that governs competitive markets. This strategy - the 'invisible foot' - shows that the unreliability of corrupt counterparts induces honesty and good governance even in the absence of good intentions. Combining theoretical research with state-of-the-art empirical investigations, this book will be an invaluable resource for researchers and policy-makers concerned with anti-corruption reform.

Acknowledgements
A roadmap to this book
1. Introduction
2. Enemies of corruption
3. What is bad about bureaucratic corruption? An institutional economic approach
4. The dilemma of the kleptocrat: what is bad about political corruption?
5. Corruption and transactions costs: the rent-seeking perspective
6. Making corrupt deals: contracting in the shadow of the law
7. Exporters' ethics and the art of bribery
8. How confidence facilitates illegal transactions: an empirical approach
9. Corrupt relational contracting
10. Concluding thoughts
Annex: Technical details to the Transparency International Corruption Perceptions Index
References
Index.

Subject Areas: Law [L], Political economy [KCP], Microeconomics [KCC], Comparative politics [JPB], Political science & theory [JPA]