Hostname: page-component-f7d5f74f5-vmlfj Total loading time: 0 Render date: 2023-10-05T03:22:23.739Z Has data issue: false Feature Flags: { "corePageComponentGetUserInfoFromSharedSession": true, "coreDisableEcommerce": false, "coreDisableSocialShare": false, "coreDisableEcommerceForArticlePurchase": false, "coreDisableEcommerceForBookPurchase": false, "coreDisableEcommerceForElementPurchase": false, "coreUseNewShare": true, "useRatesEcommerce": true } hasContentIssue false

Do Neoliberal Policies Deter Political Corruption?

Published online by Cambridge University Press:  15 February 2005

John Gerring
John Gerring is Associate Professor of Political Science at Boston University, Boston, Massachusetts. He can be reached at
Strom C. Thacker
Strom C. Thacker is Associate Professor of International Relations at Boston University, Boston, Massachusetts. He can be reached at
Get access


This article probes the relationship between neoliberal economic policies and political corruption, focusing in particular on the impact of trade and investment policies, regulatory policy, and the overall size of the public sector on corruption. Using a large cross-national data set from the mid- to late 1990s, we test the neoliberal hypotheses that market-oriented economic policies are associated with lower levels of political corruption, and state intervention in the economy with higher levels. Consistent with the neoliberal argument, we find that open trade and investment policies and low, effective regulatory burdens do correlate with lower levels of political corruption. However, we find no consistent relationship between the aggregate size of the public sector and political corruption. While the neoliberal hypothesis on political corruption has initial empirical support, its lessons cannot be applied wholesale. Market-oriented states may be less corrupt, but interventionist states, as measured by public spending, are not necessarily more corrupt.Previous versions of this article were presented at the annual meeting of the International Studies Association, New Orleans, La., March 24–27, 2002; the Seminar on U.S. and World Affairs, Hoover Institution, Stanford University, Palo Alto, Calif., January 2003; and the Seminar on Comparative Politics, Department of Political Science, Stanford University, February 2003. The authors thank participants at each of these venues for their valuable comments. Alberto Díaz-Cayeros, Chappell Lawson, Armando Razo, and three anonymous reviewers provided especially useful suggestions. The usual disclaimers apply. Gerring is grateful for financial support provided by the Institute for Advanced Study, and Thacker for the support provided by the Hoover Institution, Stanford University. Both Gerring and Thacker are thankful for support from the Frederick S. Pardee Center for the Study of the Longer-Range Future, Boston University.

© 2005 The IO Foundation and Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)



Ades, Alberto, and Rafael Di Tella. 1997. The New Economics of Corruption: A Survey and Some New Results. In Political Corruption, edited by Paul Heywood, 8089. Oxford, England: Basil Blackwell.
Ades, Alberto, and Rafael Di Tella. 1999. Rents, Competition and Corruption. American Economic Review 89 (4):98293.Google Scholar
Benson, Bruce L., and John Baden. 1985. The Political Economy of Governmental Corruption: The Logic of Underground Government. Journal of Legal Studies 14 (2):391410.Google Scholar
Bhagwati, Jagdish N. 1982. Directly Unproductive, Profit-Seeking (DUP) Activities. Journal of Political Economy 90 (5):9881002.Google Scholar
Buchanan, James M., and Gordon Tullock. 1962. The Calculus of Consent: Logical Foundations of Constitutional Democracy. Ann Arbor: University of Michigan Press.
Colclough, Christopher. 1991. Structuralism versus Neo-liberalism: An Introduction. In States or Markets?: Neo-liberalism and the Development Policy Debate, edited by Christopher Colclough and James Manor, 125. Oxford, England: Clarendon Press.
de Soto, Hernando. 1989. The Other Path: The Invisible Revolution in the Third World. New York: Harper & Row.
DiFranceisco, Wayne, and Zvi Gitelman. 1989. Soviet Political Culture and Modes of Covert Influence. In Political Corruption: A Handbook, edited by Arnold J. Heidenheimer, Michael Johnson, and Victor T. LeVine, 46788. New Brunswick, N.J.: Transaction Books.
Elliott, Kimberly Ann, ed. 1997. Corruption and the Global Economy. Washington, D.C.: Institute for International Economics.
Gerring, John, and Strom C. Thacker. 2004. Political Institutions and Corruption: The Role of Unitarism and Parliamentarism. British Journal of Political Science 34 (2):295330.Google Scholar
Gerring, John, Strom C. Thacker, and Carola Moreno. 2004. Do Neoliberal Policies Save Lives? A Crossnational Analysis. Unpublished manuscript, Boston University.
Goel, Rajeev K., and Michael A. Nelson. 1998. Corruption and Government Size: A Disaggregated Analysis. Public Choice 97 (1–2):10720.Google Scholar
Grindle, Merilee S., ed. 1998. Getting Good Government: Capacity Building in the Public Sectors of Developing Countries. Cambridge, Mass.: Harvard University Press.
Hellman, Joel S. 1998. Winners Take All: The Politics of Partial Reform in Postcommunist Transitions. World Politics 50 (2):20334.Google Scholar
Heywood, Paul, ed. 1997. Political Corruption. Oxford, England: Basil Blackwell.
Honaker, James, Anne Joseph, Gary King, Kenneth Scheve, and Naunihal Singh. 2001. Amelia: A Program for Missing Data (Windows version). Cambridge, Mass.: Harvard University. Updated Version 2.1 available at <>. Accessed 15 September 2004.
Jain, Arvind K., ed. 1998. Economics of Corruption. Boston: Kluwer.
Johnson, Bryan T., Kim R. Holmes, and Melanie Kirkpatrick. 1999. Index of Economic Freedom. Washington, D.C.: Heritage Foundation and Wall Street Journal.
Johnston, Michael. 2000. The New Corruption Rankings: Implications for Analysis and Reform. Paper presented at the 20th Annual World Conference of the International Political Science Association, August, Quebec City, Canada.
Johnstone, Patrick. 1993. Operation World: A Day-by-Day Guide to Praying for the World. Grand Rapids, Mich.: Zondervan Publishing.
Kang, David C. 2002. Bad Loans to Good Friends: Money Politics and the Developmental State in South Korea. International Organization 56 (1):177207.Google Scholar
Kaufmann, Daniel, Aart Kraay, and Massimo Mastruzzi. 2003. Governance Matters III: Governance Indicators for 1996–2002. Policy Research Working Paper 3106. Washington, D.C.: World Bank. Available at <>. Accessed 15 September 2004.
Kaufmann, Daniel, Aart Kraay, and Pablo Zoido-Lobatón. 1999a. Aggregating Governance Indicators. Policy Research Working Paper 2195. Washington, D.C.: World Bank.
Kaufmann, Daniel, Aart Kraay, and Pablo Zoido-Lobatón. 1999b. Governance Matters. Policy Research Working Paper 2196. Washington, D.C.: World Bank.
King, Gary, Michael Tomz, and Jason Wittenberg. 2000. Making the Most of Statistical Analyses: Improving Interpretation and Presentation. American Journal of Political Science 44 (2):34761.Google Scholar
King, Gary, James Honaker, Anne Joseph, and Kenneth Scheve. 2001. Analyzing Incomplete Political Science Data: An Alternative Algorithm for Multiple Imputation. American Political Science Review 95 (1):4969.Google Scholar
Klitgaard, Robert. 1988. Controlling Corruption. Berkeley: University of California Press.
Knack, Stephen, and Omar Azfar. 2000. Are Larger Countries Really More Corrupt? Policy Research Working Paper 2470. Washington, D.C.: World Bank.
Kramer, John M. 1989. Political Corruption in the U.S.S.R. In Political Corruption: A Handbook, edited by Arnold J. Heidenheimer, Michael Johnson, and Victor T. LeVine, 44965. New Brunswick, N.J.: Transaction Books.
Krause, Lawrence. 1998. The Economics and Politics of the Asian Financial Crisis of 1997–98. New York: Council on Foreign Relations.
Krueger, Anne O. 1974. The Political Economy of the Rent-Seeking Society. American Economic Review 64 (3):291303.Google Scholar
Krueger, Anne O. 1993. Political Economy of Policy Reform in Developing Countries. Cambridge, Mass.: MIT Press.
LaPalombara, Joseph. 1994. Structural and Institutional Aspects of Corruption. Social Research 61 (2):32550.Google Scholar
Leite, Carlos, and Jens Weidmann. 1999. Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth. Working Paper 99/85. Washington, D.C.: International Monetary Fund.
Lewis, Peter, and Howard Stein. 1997. Shifting Fortunes: The Political Economy of Financial Liberalization in Nigeria. World Development 25 (1):522.Google Scholar
Liu, Alan P. L. 1989. The Politics of Corruption in the People's Republic of China. In Political Corruption: A Handbook, edited by Arnold J. Heidenheimer, Michael Johnson, and Victor T. LeVine, 489511. New Brunswick, N.J.: Transaction Books.
Lu, Xiaobo. 2000. Booty Socialism, Bureau-Preneurs, and the State in Transition: Organizational Corruption in China. Comparative Politics 32 (3):27396.Google Scholar
Manzetti, Luigi, and Charles Blake. 1996. Market Reforms and Corruption in Latin America: New Means for Old Ways. Review of International Political Economy 3 (4):67182.Google Scholar
North, Douglass C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.
O'Donnell, Guillermo. 1993. On the State, Democratization and Some Conceptual Problems: A Latin American View with Glances at Some Postcommunist Countries. World Development 21 (8):135569.Google Scholar
Peltzman, Sam. 1976. Toward a More General Theory of Regulation. Journal of Law and Economics 19 (2):21140.Google Scholar
Phongpaichit, Pasuk, and Sungsidh Piriyarangsan. 1994. Corruption and Democracy in Thailand. Bangkok, Thailand: Political Economy Center, Faculty of Economics, Chulalongkorn University.
Ranis, Gustav. 1990. Contrasts in the Political Economy of Development Policy Change. In Manufacturing Miracles: Paths of Industrialization in Latin America and East Asia, edited by Gary Gereffi and Donald L. Wyman, 20730. Princeton, N.J.: Princeton University Press.
Reno, William. 1995. Corruption and State Politics in Sierra Leone. Cambridge: Cambridge University Press.
Riley, Stephen P. 1998. The Political Economy of Anti-Corruption Strategies in Africa. In Corruption and Development, edited by Mark Robinson, 12959. London: Frank Cass.
Robinson, Mark, ed. 1998. Corruption and Development. London: Frank Cass.
Sandholtz, Wayne, and William Koetzle. 2000. Accounting for Corruption: Economic Structure, Democracy, and Trade. International Studies Quarterly 44 (1):3150.Google Scholar
Scott, James C. 1972. Comparative Political Corruption. Englewood Cliffs, N.J.: Prentice-Hall.
Scully, Gerald W. 1991. Rent-Seeking in U.S. Government Budgets, 1900–88. Public Choice 70 (1):99106.Google Scholar
Shleifer, Andrei, and Robert W. Vishny. 1998. The Grabbing Hand: Government Pathologies and Their Cures. Cambridge, Mass.: Harvard University Press.
Smarzynska, Beata K., and Shang-Jin Wei. 2002. Corruption and Cross-Border Investment: Firm-Level Evidence. Working Paper 494. Ann Arbor: William Davidson Institute/University of Michigan School of Business.
Smith, Adam. [1776] 1937. An Inquiry into the Nature and Causes of the Wealth of Nations. New York: Modern Library.
Snyder, Richard. 1999. After Neoliberalism: The Politics of Regulation in Mexico. World Politics 51 (2):173204.Google Scholar
Stigler, George J. 1971. The Theory of Economic Regulation. The Bell Journal of Economics and Management Science 2 (1):321.Google Scholar
Tanzi, Vito. 1995. Corruption, Governmental Activities, and Markets. Finance and Development 32 (4):2426.Google Scholar
Tanzi, Vito. 1998. Corruption Around the World: Causes, Consequences, Scope, and Cures. IMF Staff Paper 45 (4):55994.Google Scholar
Tanzi, Vito, and Hamid Davoodi. 1997. Corruption, Public Investment, and Growth. IMF Working Paper 97/139. Washington, D.C.: International Monetary Fund.
Tendler, Judith. 1997. Good Government in the Tropics. Baltimore, Md.: Johns Hopkins University Press.
Thacker, Strom C. 2000a. Big Business, the State, and Free Trade: Constructing Coalitions in Mexico. New York: Cambridge University Press.
Thacker, Strom C. 2000b. Private Sector Trade Politics in Mexico. Business and Politics 2 (2):16187.Google Scholar
Theobald, Robin. 1990. Corruption, Development and Underdevelopment. London: Macmillan.
Tomz, Michael, Jason Wittenberg, and Gary King. 2001. CLARIFY: Software for Interpreting and Presenting Statistical Results. Version 2.0. Cambridge, Mass.: Harvard University. Updated version available at <>. Accessed 15 September 2004.
Treisman, Daniel. 2000. The Causes of Corruption: A Cross-National Study. Journal of Public Economics 76 (3):399457.Google Scholar
van de Walle, Nicolas. 2001. African Economies and the Politics of Permanent Crisis, 1979–1999. Cambridge: Cambridge University Press.
Varese, Federico. 1997. The Transition to the Market and Corruption in Post-Socialist Russia. In Political Corruption, edited by Paul Heywood, 16380. Oxford, England: Basil Blackwell.
White, Gordon. 1996. Corruption and Market Reform in China. IDS Bulletin 27 (2):4047.Google Scholar