Corruption happens, lobbying rules

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|Corruption happens, lobbying rules |
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|NauroF. Campos |
|8 November 2008 |
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|This column presents evidence that lobbying is not only much more prevalent in developing countries than previously thought but also |
|much more effective than corruption as a means of influencing public policy and supporting enterprise growth.|
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|Conventional wisdom suggests that corruption is a fundamental barrier to economic development and endemic in developing countries. |
|Examining the vast literature that has emerged in the last two decades or so, one could beexcused for thinking that corruption is not |
|just one way to influence policy in poor or developing countries, but it is the only way. Are there any other means? Are these other |
|means more or less effective than corruption? Recent research raises the possibility that one alternative, lobbying, is not only much |
|more prevalent in developing countries than previously thought, but also thatit is more effective than corruption as a means of |
|influencing public policy and in supporting the performance of business firms (in terms of sales growth.) |
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|Developing country lobbying|
|We still know very little about lobbying in developing countries. To many analysts, the distinction between lobbying and corruption is |
|not obvious. There are, however, some important differences, and they centre on the notions that corrupt practices are illegal, that |
|corruption activities tend to involvebribes or illegal payments and, arguably the most important difference, that corrupt practices |
|tend to directly benefit a small number of “users” (often one individual) while lobbying activities are carried out in order to benefit|
|a group of users that share a specific interest. |
|Empirical evidence onlobbying in developing countries as a whole is starting to accumulate (Thomas and Hrebenar, 2008), particularly |
|for the so-called transition economies (Frye, 2002, is an early example). The transition economies as a group provide an extraordinary |
|setting to test ideas on the relative importance of lobbying and corruption. They provide an almost natural experiment in the sense |
|thattheir political and economic systems were very similar until the collapse of communism in 1989. Afterwards, this set of countries |
|followed different strategies of political and economic reform with many becoming fully-fledged democracies and members of the EU |
|(e.g., Hungary and the Czech Republic) while others experienced heavy economic turmoil and limited improvement in political...
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