Why debt sustains corruption in Greece and vice versa
Tuesday, 28 July 2015 , Written by « World Economic Forum »   

Corruption is typically unobserved in formal data, so it is difficult to document its extent. Since the work of Schattschneider (1935), theories of rent seeking and corrupt legislative bargaining – further developed by Ferejohn (1986) and Persson (1998), and outlined in the book by Persson and Tabellini (2000) – link up the observable effects of corruption to rent-extraction mechanisms.

These theories help in estimating rents, but we are unaware of a study that obtains such estimates for Greece. Nevertheless, everyday life in Greece suggests that clientelistic goods traded by political parties include examples such as:

  • Civil-servant jobs, for which devoted party members can put in less effort at work, and for which party members may be underqualified.

  • Tax evasion, with parties supporting networks of non-transparency through insiders in public authorities.

  • Preferential legal treatment using a partisan network of underreporting through public authorities.

  • Privileges regarding the management of real estate.

  • Fiscal over-invoicing.

  • Wasteful public infrastructure related to private benefits, such as building roads leading to specific private properties against city-plan efficiency.

  • Fraud in granting disability benefits (Angelos 2012), etc. read more story in The World Economic Forum

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