Political Management and Corruption in Developing Nations

By DiRienzo, Cassandra E.; Redington, Douglas B. | Global Journal of Business Research, March 1, 2014 | Go to article overview

Political Management and Corruption in Developing Nations


DiRienzo, Cassandra E., Redington, Douglas B., Global Journal of Business Research


ABSTRACT

This study empirically explores the relationship between corruption and the quality of political management in developing nations using a cross-country data set. Specifically, this analysis jointly considers the two theoretical effects of corruption, 'grease the wheels ' and 'sand in the wheels ', argued in the literature to determine if a nonlinear relationship exists between corruption and the quality of political management. Using a cross-country data set of 114 countries, the results of this study suggest that corruption has an overall negative effect on the quality of political management in developing nations; however, political managers can benefit from a minimal level of corruption and that the complete absence of corruption can hinder the effectiveness of political managers. The Concluding Comments section includes a discussion of the policy implications of the findings.

JEL: O57; O15

KEYWORDS: Political Management, Corruption, Developing Nations, Nonlinear

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

Political leaders influence and guide all facets of a country's growth and development. Through domestic and international policy development, political leaders shape the economic, social, and political landscape of their countries. The relationships policy leaders form with other global leaders can significantly affect their country's standing in the global community, which can then play a role in international trade and foreign direct investment, among many other factors. In short, political leaders have a substantial influence on almost every aspect of their country; from its basic economic well-being to its global relationships. Nonetheless, some policy leaders have been very successful in leveraging their countries' positive attributes by steering their countries through sustained democratic transformation and development, while other leaders have floundered. Thus, the question arises as to what factors can influence policy leaders' ability to bring about effective country-level change and development. In other words, what factors influence effective political management?

In regards to effective political management, the focus of this study is political leaders operating in developing or transforming countries. Although past research has identified several factors that can alter the effectiveness of political managers, an area needing further study is the effect of corruption on the quality of political management, especially in developing nations. Researchers such as Aguilera and Vadera (2008), Johnston (1996), Heidenheimer (1989), and Van Klaveren (1989) have described corruption as a variety of behaviors. These included bribery of public officials, collusion between two parties, and the abuse of authority for personal gain. A considerable literature has found that corruption weakens a country's institutions and hampers nation-building activities designed to bring about transformative change, or as Ades and Di Telia (1997), state corruption acts as 'sand in the machine'. Nonetheless, as Jain (2001) summarizes, there is a small, but growing stream of research that finds corruption can 'grease the wheels' of bureaucratic rigidities and facilitate transactions and, in this light, serve to increase efficiency. Thus, past studies suggest that corruption can either hinder or, in some cases, boost political leaders' ability to drive positive transformative change and development. Current news out of two countries illustrate polar opposite effects of corruption on the international and economic status of the country. According to a recent story by Romero in the New York Times (April 24, 2013), Paraguay is the "fastest growing country in the Americas," while being extremely corrupt, especially in land disputes. Alternatively, Zimbabwe, in economic decline fueled in part by government corruption, recently reelected their leader, Mr. Mugabe, to a seventh consecutive term in power. …

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