Economics of trickle-down corruption

Abstract

Purpose

This study aims to examine the effect of the crude oil price crash of 2014 on corruption decentralisation. In a corrupt state, a significant decrease in the state revenue might lead to concentration of power in the hands of the political elite who try to maintain their income, or to a weakening of the elite’s control as the bureaucrats compete for bribes.

Design/methodology/approach

Crude oil price crash provides a rare opportunity to test the effect of reduced state revenue on corruption decentralisation. This study constructs a measure for corruption decentralisation and analyses how it is affected by state income in 18 resource-rich and corrupt states.

Findings

The empirical model suggests that there is a positive relationship between corruption decentralisation and state oil and gas revenue, implying that as the revenue decreases, political elite in the exporting countries manage to maintain their control over the bureaucrats.

Originality/value

The results are important for academics as well as for policymakers, as they allow adjustment of anti-corruption efforts based on the level of corruption decentralisation.

Citation

Nuryyev, G. and Hickson, C. (2020), "Economics of trickle-down corruption", International Journal of Development Issues, Vol. 19 No. 1, pp. 93-102. https://doi.org/10.1108/IJDI-09-2019-0164