Corruption cleanups in developing societies: the public choice perspective

This paper employs the method of public choice to examine corruption cleanup strategies in the developing countries, with special emphasis on Africa. Most African countries have weak, inefficient and non-viable institutional arrangements and heavily regulated economies. Pervasive state intrusion in all aspects of economic activities has created many opportunities for rent seeking. Bureaucrats who are charged with implementing national development programs and enforcing the state's regulations, are able to extort bribes from entrepreneurs seeking favors from the government. Favors sought include opportunities to obtain lucrative import licenses, foreign exchange permits, access to subsidized credit, and investment and production licenses, and to minimize taxes that an enterprise must pay the state. Bureaucratic corruption, thus, is primarily rent-seeking behavior and is directly related to the scope and level of government intervention in private exchange. The politicization of resource allocation accounts for a significant part of bureaucratic corruption in the developing countries. Thus, any attempt to eliminate corruption from these societies must begin with effective institutional reforms which constitutionally limit the ability of the state to intervene in private exchange.