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The New Institutional Economics of Corruption, edited by Johann Graf Lambsdorff, Markus Taube and Matthias Schramm

Following a workshop organized by the editors a new publication on the New Institutional Economics of Corruption is now available. The volume has been published by Routledge: London, September 2004.

Corruption is a major barrier to sound development, affecting a wide range of economies across the world. Measuring and explaining corruption is no easy task; this book sets about it with real vigour.

Examining the institutional foundations of corrupt transactions, this book provides a new perspective towards the analysis of corrupt behaviour as well as the design of anti-corruption policies. It does so by identifying institutions that may facilitate corruption, such as particularistic trust, social norms that foster reciprocity, intermediaries, hierarchies and network-type organizations.

With an international troop of contributors, this book will impress academics with an interest in institutional economics, sociology and corruption. It will also prove to be a useful addition to policy-makers in the sphere of fighting corruption.

Excerpt from the introduction:

A first wave of anti-corruption activities related to more draconic penalties and higher probabilities of detection of malfeasance. This approach had its merits, but it is uncertain whether it can be guiding principle for the future. If the effects follow an economic law of decreasing marginal gains and increasing marginal costs, the likely outcome is that criminals are decreasingly deterred by increased penalties while the pursuit of absolute integrity becomes increasingly expensive. Law enforcement requires an honest judiciary, it is costly to carry out, administrative procedures may become more complex, and the intrinsic motivation of the bureaucracy may decline. These drawbacks of law enforcement may be felt increasingly in the future, and other guiding principles will be sought that inspire anti-corruption. We believe that New Institutional Economics can provide us with a vivid starting point for future reform approaches. It can stimulate more innovative reform ideas in promising areas. The general approach suggested by New Institutional Economics for reform would be to encourage betrayal among corrupt parties, to destabilize corrupt agreements, to disallow contracts to be legally enforced, to hinder the operation of corrupt middlemen and to find clearer ways of regulating conflicts of interest.
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