THE CAUSES AND CONSEQUENCES OF thesis then continues by ... human societies ... This study provides new insight into the causes and consequences of corruption ...

Download THE CAUSES AND CONSEQUENCES OF   thesis then continues by ... human societies ... This study provides new insight into the causes and consequences of corruption ...

Post on 06-Mar-2018

220 views

Category:

Documents

8 download

Embed Size (px)

TRANSCRIPT

  • THE CAUSES AND CONSEQUENCES

    OF

    CORRUPTION

    A THESIS PRESENTED IN FULFILMENT OF THE

    REQUIREMENTS FOR THE DEGREE OF

    DOCTOR OF PHILOSOPHY IN ECONOMICS

    March 2011

    BIN DONG

    School of Economics and Finance

    Faculty of Business

    Queensland University of Technology

    Gardens Point Campus

    Brisbane Australia

  • i

    Acknowledgements

    I would like to express my gratitude to my principal supervisor Professor Benno Torgler, for

    walking me through the journey of PhD study and for being there at every step as a source of

    inspiration, motivation and moral support. Professor Torglers excellent supervision,

    invaluable guidance, suggestions, corrections and empirical skills have helped shape much of

    this thesis. I would also like to extend deepest appreciation to my associate supervisor

    Professor Uwe Dulleck for his invaluable guidance and encouragement throughout this study.

    I extend my thanks to Dr. David Johnston for offering invaluable comments and suggestions

    for empirical analysis. I also extend special thanks to the members of the administrative staff

    of the School of Economics and Finance.

    I am extremely grateful to China Scholarship Council and Queensland University of

    technology for jointly providing me the financial support for my PhD study.

    I am deeply indebted to my wife Jin Kang, who has been the motivational force in my life,

    and thank her for her patience, understanding and invaluable support during the PhD study. I

    am grateful to my mother, brother for their selfless and unreserved support over the years.

    Finally I would like to thank Ms Ying Zhou, Mr Tony Beatton and Mr Markus Schaffner

    for their assistance and support.

  • iii

    Abstract

    This thesis comprehensively studies the causes and consequences of corruption in both cross-

    country and within-country contexts, mainly focusing on China.

    The thesis commences by extensively investigating the causes of corruption. Using the

    standard economic approach, this study finds that in China regions with more anti-corruption

    efforts, higher education attainment, Anglo-American historic influence, higher openness,

    more access to media, higher relative wages of government employees, and a greater

    representation of women in legislature are markedly less corrupt; while the social

    heterogeneity, deregulation and abundance of resources, substantially breed regional

    corruption. Moreover, fiscal decentralization is discovered to depress corruption significantly.

    This study also observes a positive relationship between corruption and the economic

    development in current China that is mainly driven by the transition to a market economy.

    Focusing on the influence of political institutions on corruption, the thesis then provides

    evidence that a high level of political interest helps to reduce corruption within a society,

    while the effect of democracy upon corruption depends on property rights protection and

    income distribution. With the social economic approach, however, the thesis presents both

    cross-country and within-country evidence that the social interaction plays an important role

    in determining corruption.

    The thesis then continues by comprehensively evaluating the consequences of corruption

    in China. The study provides evidence that corruption can simultaneously have both positive

    and negative effects on economic development. And it also observes that corruption

    considerably increases the income inequality in China. Furthermore this study finds that

    corruption in China significantly distorts public expenditures. Local corruption is also

    observed to substantially reduce FDI in Chinese regions. Finally the study documents that

    corruption substantially aggravates pollution probably through a loosening of the

    environmental regulation, and that it also modifies the effects of trade openness and FDI on

    the stringency of environmental policy.

    Overall, this thesis adds to the current literature by a number of novel findings concerning

    both the causes and the consequences of corruption.

    Key Words: corruption, causes, consequences, China, democracy, social interaction, political

    interest, economic development.

  • iv

    Table of Contents

    Acknowledgements.................................................................................................................................i

    StatementofOriginalAuthorship.........................................................................................................ii

    Abstract.................................................................................................................................................iii

    TableofContents..................................................................................................................................iv

    ListofTables.........................................................................................................................................vii

    ListofFigures.........................................................................................................................................ix

    ChapterOne Introduction..................................................................................................................1

    1.1MotivationofThesis.....................................................................................................................1

    1.2ContentofThesis..........................................................................................................................2

    1.2.1CausesofCorruption..............................................................................................................2

    1.2.2ConsequencesofCorruption.................................................................................................7

    1.2.3Methodologyissues...............................................................................................................8

    1.3StructureofThesis.......................................................................................................................10

    ChapterTwo EconomicDeterminantsofCorruption:ChineseEvidence.......................................12

    2.1Introduction................................................................................................................................12

    2.2DeterminantsofCorruption........................................................................................................15

    2.3EmpiricalAnalysis........................................................................................................................18

    2.3.1ProvincelevelAnalysis.........................................................................................................20

    2.3.2CitylevelAnalysis.................................................................................................................35

    2.4Conclusion...................................................................................................................................38

    Appendix...........................................................................................................................................41

    ChapterThree PoliticalInterestandCorruption:CrosscountryEvidence..................................44

    3.1Introduction................................................................................................................................44

    3.2PoliticalInterest..........................................................................................................................45

    3.2.1TheoreticalConsiderations..................................................................................................45

    3.2.2ASimpleModel....................................................................................................................46

    3.3Data.............................................................................................................................................48

    3.3.1DependentVariables............................................................................................................48

    3.3.2MeasuringPoliticalInterest.................................................................................................50

    3.3.3FurtherIndependentVariables............................................................................................51

    3.4EmpiricalEvidence......................................................................................................................56

    3.4.1InternationalEvidence.........................................................................................................57

  • v

    3.4.2WithinCountryEvidence.....................................................................................................70

    3.5Conclusion...................................................................................................................................71

    ChapterFour DemocracyandCorruption:CrosscountryEvidence...............................................73

    4.1Introduction................................................................................................................................73

    4.2TheoreticalModel.......................................................................................................................75

    4.2.1Model...................................................................................................................................76

    4.2.2EconomicEquilibrium..........................................................................................................77

    4.2.3PoliticalEquilibrium.............................................................................................................78

    4.3EmpiricalEvidence......................................................................................................................80

    4.3.1MethodologyandData........................................................................................................81

    4.3.2Results..................................................................................................................................85

    4.4Conclusion...................................................................................................................................92

    Appendix...........................................................................................................................................93

    ChapterFive SocialinteractionandCorruption:CrosscountryEvidence.....................................94

    5.1Introduction.................................................................................................................................94

    5.2TheoreticalFoundation................................................................................................................96

    5.2.1BackgroundoftheModel....................................................................................................98

    5.2.2ASimpleGame...................................................................................................................100

    5.2.3Dynamics............................................................................................................................102

    5.2.4ConditionalCorruptionDiscussionandExtensions........................................................102

    5.3DataandMethodologicalApproach.........................................................................................103

    5.3.1MicroAnalysis....................................................................................................................103

    5.3.2MacroAnalysis...................................................................................................................107

    5.4Results.......................................................................................................................................107

    5.4.1MicroLevelusingtheEVS..................................................................................................107

    5.4.2MicroLevelusingtheWVS................................................................................................117

    5.4.3MacroLevelUsingaLargePanelDataSet.........................................................................121

    5.5Conclusion.................................................................................................................................125

    ChapterSix SocialinteractionandCorruption:WithincountryEvidence.................................127

    6.1Introduction..............................................................................................................................127

    6.2TheoreticalModel.....................................................................................................................129

    6.3EmpiricalWork..........................................................................................................................132

    6.3.1DataandMethodology......................................................................................................132

    6.3.2Results................................................................................................................................136

  • vi

    6.4Conclusion.................................................................................................................................139

    Appendix.........................................................................................................................................141

    ChapterSeven ConsequencesofCorruption:ChineseEvidence................................................142

    7.1Introduction..............................................................................................................................142

    7.2LiteratureReview......................................................................................................................145

    7.3EmpiricalAnalysis......................................................................................................................149

    7.3.1DataandMethodology......................................................................................................149

    7.3.2Corruption,EconomicGrowthandIncomeDistribution...................................................153

    7.3.3CorruptionandForeignDirectInvestment........................................................................160

    7.3.4CorruptionandPublicExpenditures..................................................................................162

    7.3.5CorruptionandtheEnvironment.......................................................................................164

    7.4Conclusion.................................................................................................................................169

    Appendix.........................................................................................................................................171

    ChapterEight Conclusion................................................

Recommended

View more >