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then $5,000). They will be willing to pay at most $5,000 to the law enforcers to drop the evidence. If this is the case the enforcer is actually ending up with the same loss of money. In addition if the enforcers expect the bribe and know they will not be persecuted if caught they are likely to work for a salary $ 5,000 less than the salary they receive if they cannot take the bribe. Thus this paper shows us how monetizing punishment is actually more effective than jail term. However the effectiveness reduces if due to competition between bribe takers the offenders can get away with less than what they would have to pay if they faced a fair travel. In order to reduce malfeasance the authors suggest paying the enforcers more than what they would receive elsewhere so that being detected will mean losing the stream of earnings from the job and the pension. In addition, according to this paper the enforcement personnel should be paid according to the violators they can apprehend. Mauro and Driscoll (1997) cites the following as the causes of corruption: 1) Trade restrictions: such as import quotas make the limited number of import licenses very valuable leading to an opportunity for the government agents to take bribes in exchange for issue of the said license. In addition tariffs to protect local industries might give the local owners an incentive to bribe politicians to make sure this system stays in palce. 2) Subsidies: Another cause is poorly targeted subsidies which give industries the incentive to appropriate them by bribing key government agents. 3) Price Controls: where prices are lowered below their market levels which creates incentives for certain groups to try to bribe government officials to get the goods at the lower p... ... middle of paper ... ...eifer (2004) find the following: 1) Human capital is more important to growth than institutional quality. 2) Good policies often pursued by dictators drive a country to prosperity 3) This in turn helps them improve institutional quality This paper cites the example of north and South Korea. Both were in a state of high poverty in 1950(it was one country than). After the split north followed a policy of socialism while south also an autocrat followed capitalism. The GDP per capita in south was $1589 and in north was $768. After 1980 south transformed to a democracy and north remained a dictatorship. While on an average the institutional quality measured by executive constraint of polity index was higher in south than the north, the paper argues that it is due to the growth started in the 1950’s and not the other way around. It is illustrated in the following diagram:
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