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ABSTRACT
This article focuses on three main limitations of the literature regarding the impact of corruption on democracy. These are the distinctions between causality and correlation, channels underlying the impact and the shape of the relationship. The study uses recent developments in panel data causality and non-linear econometrics, breaks democracy down into different components and analyses the form of the relationship. We find that the relationship between the variables is often non-linear. Control of Corruption leads to a higher democracy; the components of democracy are also affected by corruption. These findings add to the literature in three respects: (i) corruption has a causal effect on democracy and, hence, single equation estimation poses problems, (ii) assuming linearity of the relationships between control of corruption and democracy is also possibly problematic and (iii) the channels of transmission of the effects of corruption on democracy are diverse.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 Gillin, “The Origin of Democracy,” 704–14.
2 Mechkova, Lindberg, and Lührmann, “How Much Democratic Backsliding?” 162.
3 Warren, “What Does Corruption Mean in a Democracy?” 328.
4 Sekkat, “Is Corruption Curable?” 123.
5 Schumpeter, “Capitalism, Socialism, and Democracy”; Saha et al., “Democracy and Corruption,” 287; Kolstad and Wiig, “Does Democracy Reduce Corruption?” 1198.
6 Merkel, “Embedded and Defective Democracies,” 33.
7 Törnquist, “Politics and Development,” 98.
8 Sung, “Democracy and Political Corruption,” 179.
9 Williamson, “The New Institutional Economics,” 595.
10 Méon and Sekkat, “Does Corruption Grease or Sand,” 69; Aidt, Dutta, and Sena, “Governance Regimes, Corruption and Growth,” 195.
11 Merkel, “Embedded and Defective Democracies,” 33–58.
12 Juodis, Karavias, and Sarafidis, “A Homogeneous Approach to Testing,” 93–112.
13 Seo and Shin, “Dynamic Panels with Threshold Effect,” 169–86.
14 The main forms of corruption are: Bribery; embezzlement; extortion and favoritism. See Sekkat for a detailed discussion of these various forms of corruption (Sekkat, “Is Corruption Curable?”).
15 Schmitter and Karl, “What Democracy Is,” 76.
16 Haas, “Democracy: Components and Types,” 5.
17 Kolstad and Wiig, “Does Democracy Reduce Corruption?” 1200.
18 Merkel, “Embedded and Defective Democracies,” 14.
19 Blake and Martin, “The Dynamics of Political Corruption,” 1.
20 Merkel, “Embedded and Defective Democracies” and Rothstein and Varraich, “The State and Social Capital.”
21 Rothstein and Varraich, “Making Sense of Corruption,” 96–7.
22 Rose-Ackerman, “Political Corruption and Democracy.”
23 Klašnja, “Corruption and the Incumbency Disadvantage,” 928.
24 Merkel, “Embedded and Defective Democracies,” 14.
25 Ruiz-Rufino, “When Do Electoral Institutions Trigger,” 331.
26 Rose-Ackerman, “Political Corruption and Democracy.”
27 Miller, “External Territorial Threats and Tolerance,” 1.
28 Kunicovã and Rose-Ackerman, ‘Electoral Rules and Constitutional Structures,’ 573.
29 Miller “External Territorial Threats and Tolerance.”
30 Anduiza, Gallego, and Muñoz, “Turning a Blind Eye Experimental Evidence,” 1664.
31 Rose-Ackerman, “Political Corruption and Democracy.”
32 International Bar Association, Sextortion: A Crime of Corruption, 8; Transparency International, Breaking the Silence Around Sextortion, 4.
33 Rothstein and Uslaner, “All for One: Equality, Corruption”; Rothstein and Stolle, “The State and Social Capital.”
34 Holmberg, Rothstein, and Nasiritousi, “Quality of Government: What You Get.”
35 Voigt and Gutmann, “On the Wrong Side of the Law.”
36 Kolstad and Wiig, “Does Democracy Reduce Corruption?” 1200.
37 Ibid., 1200.
38 Zyglidopoulos, “Toward a Theory of Second-Order Corruption,” 3.
39 Ibid., 3.
40 Voigt and Gutmann, “On the Wrong Side of the Law,” 156.
41 Sekkat, “Have You Been Served.”
42 Stier, “Democracy, Autocracy and the News.”
43 Guerrier, “Security and Democracy.”
44 Clausen, Kraay, and Nyiri, “Corruption and Confidence in Public Institutions.”
45 Warren, “What Does Corruption Mean.”
46 Sundström, “Covenants with Broken Swords.”
47 Agerberg, “The Curse of Knowledge?”
48 Warren, “What Does Corruption Mean,” 328.
49 Sundström, “Covenants with Broken Swords.”
50 Stockemer, LaMontagne, and Scruggs, “Bribes and Ballots.”
51 Espejel-Mena, “The Ability to Govern.”
52 Lui, “A Dynamic Model of Corruption.”
53 Montes and Paschoal, “Corruption: What Are the Effects on Government.”
54 Ibid.
55 Juodis, Karavias, and Sarafidis, “A Homogeneous Approach to Testing,” 93–112.
56 Ibid., 93–112.
57 Merkel, “Embedded and Defective Democracies,” 14.
58 Actually, the name in the data bank is “Freedom of association and assembly.”
59 Juodis, Karavias, and Sarafidis, “A Homogeneous Approach to Testing,” 93–112.
60 For more detailed description of electoral systems, see for instance: Bormann, and Golder, “Democratic Electoral Systems”; Kunicovã and Rose-Ackerman, “Electoral Rules and Constitutional Structures.”
61 Ruiz-Rufino, “When Do Electoral Institutions Trigger.”
62 Huu, “Individual-Level Evidence.”
63 Clausen, Kraay, and Nyiri, “Corruption and Confidence in Public Institutions.”
64 Hakhverdian and Mayne, “Institutional Trust, Education and Corruption.”
65 Stockemer, LaMontagne, and Scruggs, “Bribes and Ballots.”
66 Méon and Sekkat, “Does Corruption Grease or Sand.”
67 Aidt, Dutta, and Sena, “Governance Regimes, Corruption and Growth.”
68 McMann et al., “Why Low Levels of Democracy Promote Corruption,” 893.
69 Brueckner, “Democracy and Corruption.”
70 Seo and Shin, “Dynamic Panels with Threshold Effect,” 169–86.
71 Ibid., 169–86.
72 Aidt, Dutta, and Sena, “Governance Regimes, Corruption and Growth.”
73 Hansen, “Threshold Effects in Non-Dynamic Panels.”
74 Seo and Shin, “Dynamic Panels with Threshold Effect,” 169–86.
75 Ibid., 169–86.
76 Hansen, “Threshold Effects in Non-Dynamic Panels.”
77 Seo and Shin, “Dynamic Panels with Threshold Effect,” 169–86.
78 Méon and Sekkat, “Does Corruption Grease or Sand.”
79 Billger and Goel, “Do Existing Corruption Levels Matter.”
80 Sung, “Democracy and Political Corruption.”
81 Treisman, “The Causes of Corruption”; Pellegata, “Constraining Political Corruption.”
82 Montinola and Jackman, “Sources of Corruption”; Rock, “Corruption and Democracy.”
83 Petersen, “Early Democratization, Corruption Scandals.”
84 Saha et al., “Democracy and Corruption.”
85 McMann et al., “Why Low Levels of Democracy Promote Corruption.”
86 Brueckner, “Democracy and Corruption.”
87 Houle, “Does Ethnic Voting Harm Democracy?”
88 Hakhverdian and Mayne, “Institutional Trust, Education and Corruption.”
89 Huu, “Individual-Level Evidence.”
Additional information
Notes on contributors
Khalid Sekkat
Khalid Sekkat is PhD and Full Professor in economics. His fields of interest are international economics, and development economics. On these themes, he published nine books and numerous papers in international refereed journals (Journal of International Economics, European Economic Review, Public Choice, and Journal of Development Economics). He has held a visiting professorship at various universities (Louvain, Paris, Strasbourg, Seville, and Casablanca). He was Economic Adviser at the European Commission, Research Director of the Economic Research Forum (Cairo) and Chairman of the Department of Economics at the University of Brussels. He also has acted as a consultant to the European Parliament, the European Commission, the World Bank and the OECD.
Fredj Fhima
Fredj Fhima is PhD in Economics from the University of Paris-Est Créteil, France. He is an Assistant-Professor at the University of Sousse (Institute of Higher Commercial Studies), Tunisia where he teaches Microeconomics, Market Structures, and Microfinance. He currently works as a Senior Researcher at the research team Laboratory Research for Economy, Management and Quantitative Finance. His research interests include: Small and Medium-sized Enterprises financing, and Corruption in banking system and economic development. He writes and presents on these issues.
Ridha Nouira
Ridha Nouira is a professor of quantitative economics at Higher Institute of Finance and Taxation of Sousse. He holds a PhD from the University of Tunis El Manar, Tunisia. His core field of specialization is international economics and panel econometrics. He is a member of LAMIDED, University of Sousse, Tunisia. His research output includes more than 35 research articles in leading international journals and conferences. His research interests include: oil prices and economics indicators, corruption and Growth, misalignment and growth, corruption and sustainability.