Ethnic Diversity, Democracy, and Corruption

September 1, 2007

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Format: Chicago

Etienne B Yehoue. Ethnic Diversity, Democracy, and Corruption, (USA: International Monetary Fund, 2007) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

I study the link between ethnic diversity, democracy, and corruption. In a static model, I show that contrary to conventional wisdom, corruption might emerge as a negative externality of democracy. This occurs through ethnicity, which appears as a rent-extracting technology in a democratic society. Extending the model into a dynamic framework, I find that this technology of extraction operates only at the early stage of democracy. Its impact tends to phase out as democracy matures. In other words, the model predicts that democracy exhibits a threshold effect on corruption.

Subject: Corruption, Personal income, Population and demographics, Tax incentives, Wages

Keywords: Upper bound, WP

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/218
Stock No:

WPIEA2007218
ISBN:

9781451867824
ISSN:

1018-5941

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