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“Rent Seeking versus Extraction: Converse Corruption Cycles in Vietnam” by Ngoc Phan & Dean Dulay

March 9, 2022 @ 9:00 am 10:00 am JST

Registration required!

Authors: Ngoc Phan (Duke) and Dean Dulay (Singapore Management)

Abstract: A large literature has established that timing affects when politicians choose to engage in corruption. But the literature on how timing matters is mixed—some papers show that corruption is high at the beginning of a politician’s tenure and falls over time, while others find the opposite effect. These divergent results can be reconciled by separating two types of corruption. For rent-seeking corruption, the relationship between level of corruption and tenure is U-shaped: corruption is high at the beginning, falls in the middle, and picks up at the end. In contrA large literature has established that timing affects when politicians choose to engage in corruption. But the literature on how timing matters is mixed—some papers show that corruption is high at the beginning of a politician’s tenure and falls over time, while others find the opposite effect. These divergent results can be reconciled by separating two types of corruption. For rent-seeking corruption, the relationship between level of corruption and tenure is U-shaped: corruption is high at the beginning, falls in the middle, and picks up at the end. In contrast, for extractive corruption, the relationship follows an inverse-U relationship. We test our theory on provincial chairmen (PCOMs) in Vietnam and 15 years of the Provincial Competitiveness Index (PCI), a nationally representative survey of Vietnamese firms. We find that the hypothesized relationship between tenure and level of corruption for both rent-seeking and extraction are supported by the data..

Discussants: TBD.

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