Corruption in Transition: Economic and political drivers of government corruption in the transition countries

Abstract: This thesis analyses the connection between institutional and geographical factors and the prevalence of government corruption in the transition countries. The main findings are that corruption tends to decrease with the incidence of political freedom, property rights enforcement, and market competition. Political freedom is also shown to be non-linearly related to corruption, so that unfree countries tend to benefit less from democratisation than countries that have already made substantial reform. The effect of geography, in the form of natural resources, does not appear to be a significant determinant of corruption, once institutions are controlled for. Moreover, evidence is presented suggesting that the link from institutions to corruption is causal in nature, and especially so for the institution of market competition. These conclusions about causality are drawn based on the use of instrumental and historical variables for institutional quality.