CORRUPTION Syndromes of Corruption

Participation, institutions, and syndromes of corruption 47
civil society will be inhibited as elites’ personal followings cross-cut or
supplant ‘‘horizontal’’ self-organization, and people will thus have little
recourse in cases of official abuse.
While mature market democracies resemble each other in many ways, in
Official Mogul cases much depends upon the personalities and agendas of
those in power. Some may back economic reform or at least refrain from full
exploitation of corrupt opportunities, and where that is the case considerable
growth may occur. Others ruthlessly exploit both state and economy
with devastating results. Corruption-and-development connections within
this group of countries will vary widely as a consequence. Many of these
countries are poor, though corruption is scarcely the sole cause of poverty.
Oftentheydependuponprimaryexportssuchasoilandminerals,asituation
known to distort development and encourage corruption (Mauro,
1998;Barro,1999; Leite and Weidmann, 1999;SachsandWarner,2001;
Dietz, Neumayer, and de Soysa, 2004; Papyrakis and Gerlagh, 2004). But
even in poor countries a political monopoly can be a very efficient way to
extract wealth, both from the domestic economy and from any aid, loans,
and investment flowing in from outside. Where several factions contend
matters may be even worse: weak institutions can mean that wealth for
oneself and rewards for backers are best had by exploiting some fragment of
state power – in effect, creating a series of independent monopolies tapping
into various parts of the economy. That state of affairs is like a highway on
which independent operators collect tolls with each running a monopoly –
pay up, or passage is denied (Shleifer and Vishny, 1993). Tolls may
become so high that traffic declines or ceases. Coordinated monopolies –
cooperation to set more bearable rates – would be more profitable and less
disruptive in the long run, but unless a particularly strong and insightful
leader holds power that may not be possible.
Liberalization, too, has complex implications where institutions are
weak and politicians enjoy impunity. Integration into the world economy
may check corruption (see, for example, Sandholtz and Koetzle, 2000;
Treisman, 2000; Larraín and Tavares, 2004) for several reasons, ranging
from the influx of advanced management techniques to the growth of
alternatives to doing business with official moguls. But poor, undemocratic
countries just beginning to open up markets – especially those
dependent upon the export of basic commodities – are likely to be only
weakly integrated into the world economy, or to be integrated in disadvantageous
ways. That makes it easier for authoritarian rulers to monopolize
cross-border flows of goods and capital, particularly early in the
process of liberalization.
In many ways then this is the most diverse of our four groups of
countries. Several Middle Eastern states may fit this pattern, to varying