Economics of Corruption: Causes, Consequences and Extent

The aim of this study is to present a survey of economic literature concerning the analysis of corruption. Following the theoretical survey is a brief discussion of this phenomenon in the Turkish context. The survey covers definitions and forms of corruption, an application of the new institutional economics framework to the analysis of the phenomenon, the case of the self-serving principal, the causes and consequences of corruption, and issues pertinent to the measurement of corruption perceptions. The chapter on making corrupt deals emphasises friendship as a facilitator for corrupt deals using the tools of the new institutional economics. The chapter on causes and consequences of corruption, on the other hand, focuses on the empirical studies concerning corruption. Among the findings reported in this chapter is that given the state of data, concluding on causality might be problematic for some variables, although it is known that these go hand in hand with corruption. The last chapter sets the historical background and discusses the role of some institutions in Turkey. Furthermore, a snapshot of where the country stands is presented based on results from both Transparency International's Corruption Perceptions Index and a series of country-wide surveys conducted by Adaman, Çarkoglu and Senatalar. This chapter diagnoses a grave crisis of confidence in institutions such as the Parliament and political parties, local and central governments as well as occupational groups such as MPs, traffic police, tax inspectors and customs officials.

(Approved by Prof. Dr. Sevket Pamuk, Prof. Dr. Fikret Adaman, Asst. Prof. Nadir Özbek)