Last month the Quality of Government (QoG) Institute at the University of Gothenburg published a working paper of mine, entitled Corruption as a Self-Reinforcing “Trap”: Implications for Reform Strategy, as part of their QoG working paper series. Here’s the abstract:
Corruption is widely believed to be a self-reinforcing phenomenon, in the sense that the incentive to engage in corrupt acts increases as corruption becomes more widespread in the relevant community. Leading scholars have argued that corruption’s self-reinforcing property implies that incremental anticorruption reforms cannot be effective, and that the only way to escape a high-corruption equilibrium “trap” is through a so-called “big bang” or “big push.” This widespread view is mistaken. After surveying the reasons corruption might be self-reinforcing (or in some cases self-limiting), this paper demonstrates that corruption’s self-reinforcing property does not imply the necessity of a “big bang” approach to reform, and indeed may strengthen the case for pursuing sustained, cumulative incremental anticorruption reforms.
I hope that some readers might find the paper to be of interest. Constructive criticism and other feedback are of course most welcome!
Thank you for the post! Three thoughts:
1. The distinction between changing the equilibria and moving between equilibria in the context of corruption is extremely interesting and thought-provoking. I think it would be fascinating to try and characterize which cases fall under which type of change. For example, in countries where elections are held relatively often, it could be argued that legal reforms are better conceptualized as a move between equilibria (compared to countries with more stable governments, able to legislate longer-lasting reforms); or when reforms are legislated close to the end of the current presidential term (e.g., Obamacare). Therefore, there is a possible framing for the paper that is alternative to the proposition that legal reforms are necessarily equilibria-changing: that this is an important distinction due to the differences in policy implications that result from the analysis.
2. I would use the idea of multiple-equilibria to advance another distinct argument in favor of the conclusion that incremental reforms could be desirable: if there are not only 2 equilibria (or 3, where one is not stable, as in figure 6), but many equilibria, perhaps 20, 30 or more, that are all stable equilibria – which is certainly attainable in many models – then even those who claim that legal reforms represent a move between equilibria should agree that in such cases an incremental reform could achieve desriable outcomes, and not only a “big bang” reform.
3. I believe that your argument can certainly be supported by recent empirical data. In the last few years, the Investment Climate surveys conducted by the World Bank included various measures of corruption, and there are already enough years (and countries) in the data to see that on the one hand there are changes in corruption levels (ruling out the hypothesis that we are stuck in some singular equilibrium); but on the other hand there is no evidence in any large “jumps” in corruption, whether the specific country implemented some anti-corruption reform or not (ruling out the hypothesis that there are only large-scale transitions between equilibria). While this view on the data is only descriptive, it is suggestive of the proposition that over time we witness changing equilibria.