Ethnic Diversity, Democracy, and Corruption

Ethnic Diversity, Democracy, and Corruption
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Volume/Issue:
2007/218
Series:
IMF Working Papers
Author(s):
Etienne Yehoue
Publisher:
INTERNATIONAL MONETARY FUND
Published Date:
September 2007
DOI:
http://dx.doi.org/10.5089/9781451867824.001
ISBN:
9781451867824
ISSN:
1018-5941
Page:
22
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.
Article

Ethnic Diversity, Democracy, and Corruption1

Author(s):
Etienne Yehoue
Published Date:
September 2007
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