The Rationale of Transparent Public Finances

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The Rationale of Transparent Public Finances
Impacts on Economic Growth

• Yvan Lengwiler
• University of Basel
• Transparency Days 2007
• Belgrade

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empirical correlations

• smaller per capita income

corruption
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corruption and wealth
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Corruption Perception Index
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the poor have bureaucrats" (W. Easterly)
"The rich have markets,
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empirical correlations

• smaller per capita income

• less equal distribution of income
• weaker public finances
• higher debt
• lower per capita tax revenues
• weaker investments
• less formation of human capital (education and
  health care)
• lower trend growth rate

corruption
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The East Asian Paradox
organization of corruption network gov't with short horizon (roving bandits) gov't with short horizon (stationary bandits)
strong gov't who exerts monopoly power over corruption networks business-politicians in hyper-presidential regimes (Argentina, Brazil, Mexico) East Asia's states establish beneficial relations with capitalists in exchange for bribes (China, Indonesia, Korea, Thailand, Japan)
weak fragmented government, multiple independent monopolists some African regimes with substantial political instability India and the Philippines in the late Marcos and post-Marcos era
Source Rock and Bonnet (2004).
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which way does the causation go?
low income low growth weak investments little
human capital etc.
corruption
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vicious and virtuous circle
corruption
weak institutions
weak growth
weak property rights