More on corruption and development (AR and MR speak)

Here is a conjecture: corruption is a way for many economists and policymakers to talk about bad political outcomes without talking about politics. As long as the discussion is not about politics, there can always be a simple, non-political solution, often designed and operated by some impartial clever politicians, advisers or economists.

That is Jim Robinson and Daron Acemoglu commenting on the British fetish for anti-corruption in other countries.

My take, last week, is here. Tyler Cowen jumps in as well:

I see a strong correlation between high levels of per capita income and low corruption.  (I don’t worry about the lack of correlation with growth rates because, for one thing, poor countries, even many corrupt ones, may grow more rapidly for reasons related to the Solow model.)  The causality here is hard to sort out, but there is plenty of micro evidence that corruption harms prosperity; it’s not just an aesthetic taste of wealthy people to limit corruption, the way they might buy nice interior drapes.

Furthermore, the correct corruption/poverty model may have multiple equilibria, depending on expectations.  In that setting, making your country “look clean” may improve outcomes by shifting the economy up to better equilibria, even if lower corruption isn’t a direct cause of greater prosperity.

Fair points. We all agree, however, that corruption does not belong in the same sentence as protecting property rights or stopping civil war.

i would still argue, moreover, that if outsiders want to promote prosperity, or get out of a bad equilibria, far better to talk about term limits and strengthening political parties and parliaments. People in poor countries hate corruption too, and will eventually take care of it if they have the means to mobilize and exercise voice, and hold leaders accountable. Outsiders can’t do much about that, but if they speak loudly and consistently on the subject I think they strengthen the people’s hand.

As it happens, Marginal Revolution university’s corruption lectures went up this week. View them here.