Political Parties, Business Groups, and Corruption in Developing Countries

By Vineeta Yadav | Go to book overview
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In June 2004, the legislature in Taiwan passed a landmark labor pension reform bill, which changed the level of pension contributions employers had to make and how these funds would be managed. Interest groups from the financial markets industry the insurance sector, and labor unions lobbied the legislature intensively to influence various details of the bill. Despite a long, hard-fought, high-stakes campaign, no significant allegations of corruption regarding this lobbying process emerged from any source. A stark contrast to the Taiwan example can be observed in events surrounding passage of a controversial labor reform bill by the Argentinean parliament in 2001. Lobbying to influence this bill was marked by allegations of corruption and prosecution of many legislative policymakers on corruption charges. These charges related directly to the legislators’ interactions with business lobbies regarding the bill. The resulting scandal almost brought down President Fernando de la Rúa’s government. In both countries, the business sector had high stakes in the issue under legislative consideration and lobbying was intense. So why did business lobbying result in highly corrupt transactions in Argentina but not in Taiwan? This particular outcome reflects prevalent trends in each country. Business firms consistently rate the political establishment and public sector in Argentina as more corrupt, and more unduly influenced in its policymaking, than firms do in Taiwan.1

These contrasting examples reflect a global puzzle. Even though business interests seems inextricably linked with politics and policy everywhere, their political engagement is associated with much higher corruption in some countries than others.2 This puzzle leads us to ask the following three questions: Why do some developing democracies experience much higher levels of corruption than others? How does the behavior of business interest groups relate to political corruption? How do legislative institutions governing the policy process promote or restrain corruption through the rules of engagement they provide to political and business actors? This book tries to answer these questions by identifying how legislative institutions establish strategic


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Political Parties, Business Groups, and Corruption in Developing Countries


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