The New Political Economy of Corruption and the Motivation of Politicians: Progress and Some Open Questions

Most scientific inquiries start with a fact, and the study of corruption is no exception. Early work on the topic, mainly by political scientists, found the facts in a mixture of historical accounts, anecdotes, case studies and basic comparative analysis. With few exceptions, however, economists avoided corruption as a subject until Mauro (1995) introduced cross-country data in his study of the effects of corruption on investment. The main views on the topic at the time were in conflict. They ranged from the traditional accounts were corruption acted as a form of confiscation and deterred investment to accounts where corruption was beneficial in providing an informal incentive or bonus scheme for bureaucrats to assist businesses. By showing that the cross-country correlation between corruption and investment was negative, Mauro more or less settled this debate and gave the field the kind of empirical discipline required for fast scientific progress. A mini revolution followed, with economists and political scientists extending the field in different directions, often using data, but also revisiting old questions from new theoretical angles.