Economics is a powerful tool for the analysis of corruption. Cultural differences and morality provide nuance and subtlety, but an economic approach is fundamental to understanding where corrupt incentives are the greatest and have the biggest impact. In an earlier book, Corruption: A Study in Political Economy (1978), I made this point for an audience of economists and technically trained political scientists. Twenty years later I hope to broaden my audience and deepen my analysis with a new book that focuses on the way corruption affects developing countries and those in transition from state socialism.
The growing interest in institutional issues among development economists encouraged me to make this effort. The study of corruption forces scholars and policy makers to focus on the tension between self-seeking behavior and public values. Those worried about the development failures common throughout the world must confront the problem of corruption and the weak and arbitrary state structures that feed it.
In 1995–6 I was a Visiting Research Fellow at the World Bank in Washington, D.C. Because I previously had focused on public policy problems in the United States and Western Europe, a year at the Bank was a transformative experience. I learned a tremendous amount, not just by reading whatever was at hand, but also by making shameless use of the Bank's e-mail system to track down lunch partners with complementary interests. For a scholar used to sitting alone before a computer, the year in Washington was a welcome and energizing change. It was fascinating to work on a topic – corruption – that the Bank had treated with indirection in the past. I began to collect euphemisms. People told me that when a review of a program mentioned “governance problems,” “unexplained cost overruns,” or “excessive purchase of vehicles,” this meant that corruption and simple theft were a problem. A Bank staffer pointed out that complaints about “excessive capital-labor ratios” in a report on Indonesia meant that corruption was not only rife but costly.
My current work on corruption began before I arrived at the Bank and was completed after I left, but my understanding was deepened by talking to Bank staff who were living with the problem. Among the many supportive and helpful staffers, I want particularly to thank Ladipo Adamolekun, William Easterly, Daniel Kaufmann, Petter Langseth, John Macgregor, Boris Pleskovic, Neil Roger, Sabine Schlemmer-Schulte, Frederick Stapenhurst, and Michael Stevens.