Institutionalized Corruption and the Kleptocratic State

IMF Working Papers, July 1, 1999

Source details

Corruption patterns are endogenous to political structures.
Corruption can be systemic and planned rather than decentralized and coincidental.
In an economic system without law or property rights, a kleptocratic state may arise as a predatory hierarchy from a state of pure anarchy.
A dictator minimizes the probability of a palace revolution by creating a system of patronage and loyalty through corrupt bureaucracy.
Competitive corruption patterns are associated with anarchy and weak dictators, while strong dictators implement a system of monopolistic corruption.
Efforts at public sector reform may meet resistance in countries featuring such systemic corruption.

Mechanisms emphasized:
- Patronage and loyalty created through corrupt bureaucracy to reduce palace revolution risk.
- Transition from anarchy to predatory hierarchical state (kleptocratic state).
- Distinction between competitive corruption (anarchy/weak dictators) and monopolistic corruption (strong dictators).
Subject areas: Corruption, Crime, Labor, National accounts, Personal income, Public sector wages, Technology.
Keywords provided exactly: anarchy, combat technology, Corruption, dictatorship, gang member, governance, government objective, interest group rent-seeking, maximization problem, palace revolution, Personal income, Public sector wages, rent-seeking activity, WP

Public sector reform efforts may face resistance in countries with systemic, institutionalized corruption.
The paper implies that reform strategies must account for political-structural incentives that sustain patronage and loyalty systems.

Institutionalized Corporation and the Kleptocratic State - WP/99/91
- Institutionalized Corporation and the Kleptocratic State - WP/99/91 (Markdown version)
- Institutionalized Corporation and the Kleptocratic State - WP/99/91 (PDF)