Corruption, Rule of Law, and Economic Efficiency: Virginia vs. Chicago Public Choice Theories
Human Capital and Investment in Education: The Collection of The XIV International Scientific Conference, Prague: University of Finance and Administration, 2011
14 Pages Posted: 15 Aug 2011 Last revised: 8 Jun 2012
Date Written: August 15, 2011
Can corruption improve economic efficiency? Classical political economists argue that corruption undermines the rule of law (Smith 2001, Chap 5). The modern Public Choice proponents argue that corruption might influence the efficiency of the rule of law. While Chicago Public Choice scholars model how corruption improves efficiency of the rule of law and thus the overall economic efficiency, the Virginia Public Choice models explain how corruption reduces efficiency of the rule of law and thus the overall economic efficiency. In this short paper, we present a brief survey distinguishing among arguments of the Chicago Public Choice and Virginia Public Choice schools on how corruption influences economic efficiency. We argue that the Virginia Public Choice explanation is more realistic because it includes the influence of bureaucratic corruption.
Keywords: Bureaucracy, Corruption, Economic Efficiency, Chicago Public Choice, Virginia Public Choice, Rent-Seeking, Rule of Law
JEL Classification: D74, K42, P3
Suggested Citation: Suggested Citation