Authors: Vartuhi Tonoyan, March 2004

Kind of Publication: Conference Paper

Abstract: High-trust societies are often associated with lower levels of corruption. This holds true only for generalized trust, i.e. trust in anonymous others and institutions. The opposite is true for particularized trust, i.e. trust which is person and situation specific. Cross-cultural comparison corroborates this adverse association, suggesting that particularized trust represents the “dark side of trust”. A possible reason for this finding rests with the need of self-employed for securing economic exchange. Lacking generalized trust is substituted for particularized trust, for example by engaging in business networks. This, in turn, can be a breeding ground for corruption.

About the Authors: Vartuhi Tonoyan studied economics at the Yerevan State University of National Economy, Armenia. She is a research fellow at the Mannheim Institute for Small Business Research, Germany and a doctoral candidate at the Department for International Management at the University of Mannheim.

Authors: Matthias Schramm and Markus Taube, September 2002

Kind of Publication: Article

Abstract: This study examines the phenomenon of corruption in China using the instrument of the new institutional economics and thus attempts to illuminate the institutional foundations of corruption in China. To do this it will contrast the traditional understanding of corruption from the perspective of a personally unbound legal system with an analysis of a system where socio-economic interaction takes place within personally bound systems of order: the guanxi networks. It will be shown, that these networks offer a transaction cost minimising solution (best practice) for the problem of order that corrupt transactions are confronted with.

About the Authors: Matthias Schramm studied economics and Mandarin at Duisburg University and Wuhan University (PR China). Since 2001 he is Assistant at the Faculty of Economics, Institute of East Asian Economics at the University of Duisburg and Ph.D. student at the Faculty of Agricultural Economics at the Univesity of Göttingen.
Prof. Dr. Markus Taube studied sinology and economics in Trier and Wuhan (PR China). Since April 2000, he is professor for the East Asian Economy and China at the University of Duisburg.

Authors: Johann Graf Lambsdorff and Sitki Utku Teksoz, May 2002

Kind of Publication: Discussion Paper No. 113, Volkswirtschaftliches Seminar, University of Goettingen

Abstract: Because corruption must be hidden from the public and is not enforced by courts it entails transaction costs, which are larger than those from legal exchange. This suggests that corrupt contracts are primarily relational contracts where legal exchange serves as a basis for sealing and enforcing corrupt agreements. Legal exchange not only provides for corrupt opportunities, but for the necessary enforcement mechanisms. Examples of such legal exchange are long-term business exchange, belonging to the same firm or political party or being embedded in social relationships. The latter may even comprise the engagement in charitable institutions. Reform should not only focus on limiting opportunities for corrupt behavior but also on impeding the enforcement of corrupt agreements.

About the Authors: Sitki Utku Teksoz is a graduate student from Bogazici University, Istanbul, Turkey. The paper was written while Mr Teksoz was a visiting researcher at the University of Göttingen.

Author: Johann Graf Lambsdorff (jlambsduni-passau.de), January 2001

Kind of Publication: Discussion Paper No. 9, Center for Globalization and Europeanization, University of Goettingen

Abstract: The objectives of government are pivotal to understanding the diverse negative effects of corruption on public welfare. Corruption renders governments unable or unwilling to maximize welfare. In the first case, it distorts agents' decisions and limits the contractual space available to agents and the government, acting as a benevolent principal. In the second case, a corrupt principal creates allocative inefficiencies, cripples its credible commitment to effective policies, and opens the door to opportunism.

About the Author: Prof. Dr. Johann Graf Lambsdorff has obtained a chair position in economic theory at the University of Passau, Germany. He is senior research consultant for Transparency International. He obtained his PhD in Economics in 1994 and his habilitation in 2000 at the economics faculty of the University of Goettingen. He holds further degress in Mathematics and Sociology.

Authors: Jens Chr. Andvig, Odd-Helge Fjeldstad, Inge Amundsen, Tone Sissener and Tina Søreide

Kind of Publication: Report, commissioned by the Norwegian Agency for Development Co-operation, NORAD

Abstract: This survey is an overview of contemporary academic corruption research. It includes economic models and also political and anthropological approaches. To make the survey accessible for a multidisciplinary audience, the most abstract and technical parts of the literature are presented in a non-technical way, emphasising the intuition behind the models. The main objective is to present research that is relevant for foreign aid policies to developing countries. In this sense the survey intends to be useful - and used - by researchers, students, development practitioners and aid officials.

About the Authors: Odd-Helge Fjeldstad is an economist at the Chr. Michelsen Institute (CMI), Jens Chr. Andvig is economist at the Norwegian Institute of International Affairs (NUPI). Tina Søreide is also an economist, Inge Amundsen is political scientist and Tone Sissener a social anthropologist at CMI.

Author: Richard G. Dudley, October 2000

Kind of Publication: Draft Paper

Abstract: System dynamics models of corruption can provide a means of clearly presenting, in a holistic way, the interacting components of corrupt systems. One preliminary model employs the idea that 'amount of corruption' is part of reinforcing loops linked to 'amount of bureaucratic red tape.' In this view, corruption is also linked to lowered economic openness, and a weak legal system. Other models include factors such as the likelihood a bribe is paid and the psycho-social aspects of corruption within the work environment. Taken together these models indicate that system dynamics modeling approach has potential for elucidating corrupt systems and cures.

About the Author: Dr. Richard Dudley is a fishery biologist with more than 20 years experience working with developing country scientists and managers. His interest in corruption research results from his experiences with international development projects.

Author: Johann Graf Lambsdorff (jlambsduni-passau.de), November 1999.

Kind of Publication: Transparency International Working Paper.

Abstract: Data on the perceived level of corruption from a cross-section of countries have been fruitfully introduced into empirical research lately. This study reviews a large variety of studies on the consequences and causes of corruption. It includes research on the impact of corruption on investment, GDP, institutional quality, government expenditure, poverty and international flows of capital, goods and aid. Research on the causes of corruption focuses on the absence of competition, policy distortions, political systems, public salaries as well as an examination of colonialism, gender and other cultural dimensions.

About the Author:Prof. Dr. Johann Graf Lambsdorff has obtained a chair position in economic theory at the University of Passau, Germany. He is senior research consultant for Transparency International and author of the TI-Corruption Perception Index. He obtained his PhD in Economics in 1994 and his habilitation in 2000 at the economics faculty of the University of Goettingen. He holds further degress in Mathematics and Sociology.

Author: Jerome S. Fons, January 1999

Kind of Publication: Conference Paper

Abstract: Poor transparency can often be found in societies characterized by unchecked economic power or those with corrupt business practices. These conditions prevail in many banking systems of the Asian countries affected by the financial crisis. This viewpoint is supported empirically by reporting a strong association between the Transparency International Corruption Perceptions Index and Moody's bank financial strength ratings (BFSRs) and country ceiling ratings. We suggest that calls to increase transparency may prolong the crisis by further harming investor confidence and should wait until confidence returns and the banking systems stabilize.

About the Author: Jerome S. Fons is a Managing Director in the Banking and Sovereign Group at Moody's Investors Service in New York. He is currently responsible for Moody's ratings on East Asian banks, including Japanese banks. Prior to joining Moody's in 1990, Mr. Fons was an Economic Advisor at Chemical Bank, New York and an Economist with the Federal Reserve Banks of New York and Cleveland. Mr. Fons holds a BA in Economics from San Diego State University and a Ph.D. in Economics from the University of California at San Diego.

Authors: Björn Frank and Günther G. Schulze, July 1998.

Kind of Publication: Discussion Paper.

Abstract: Corruption is always kept secret and therefore individual behavior of corrupt agents is almost impossible to observe systematically in real life. We attempt to obtain new insights by creating a controlled experimental environment in which agents can decide to be loyal or corrupt. While we also study the impact of education (economists vs non-economists) and gender on corruptibility, the most interesting result for policy design concerns the agents' wages. It is a common policy recommendation to increase wages as a measure to combat corruption. The results of our study suggest that this will not work with agents who are not monitored.

About the Authors: Bjoern Frank and Guenther Schulze are members of the economics faculty of the University of Hohenheim and University of Konstanz, respectively.

Author: Robert Klitgaard, November 1997

Kind of Publication: Reprint of a contribution to Finance and Development, March 1998

Abstract: International cooperation can help individual countries develop both the will and the capacity to fight corruption. The paper supplies some examples. In addition, the paper proposes several new initiatives where international cooperation could play crucial roles. One idea is to sponsor regional diagnostic studies. Another is an international "contest" for the best national strategies to reduce corruption. Regional seminars would broach the idea of a strategy against corruption, with examples, and technical assistance would help countries that wished to enter the contest to design their proposals. The winners (perhaps one or two per continent) would be rewarded with seven years of sustained and additional aid. The idea is to dramatize the fight against corruption, and to emphasize that corruption is a problem of policies and management even more than it is one of ethics or cultural change.

About the Author: Robert Klitgaard is Dean and Ford Distinguished Professor of International Development and Security, The RAND Graduate School.

Author: Johann Graf Lambsdorff (jlambsduni-passau.de), September 1997

Kind of Publication: Press release to a paper forthcoming in the European Journal of Development Research, Vol. 10, No. 1, 1998

Abstract: The degree of corruption of importing countries can be shown to affect the trade structure of exporting countries. Whereas Sweden is having disadvantages with corrupt counterparts, the exports of Belgium, France, Italy, the Netherlands and South Korea are positively affected by the level of corruption of importing countries. Since geographic, sectoral, idiomatic and other influences are accounted for, it is argued that these findings are due to a differentiated inclination of exporters to offer bribes.

About the Author:Prof. Dr. Johann Graf Lambsdorff has obtained a chair position in economic theory at the University of Passau, Germany. He is senior research consultant for Transparency International and author of the TI-Corruption Perception Index. He obtained his PhD in Economics in 1994 and his habilitation in 2000 at the economics faculty of the University of Goettingen. He holds further degress in Mathematics and Sociology.