Does social capital have an economic payoff? A cross-country investigation
Quarterly Journal of Economics, 112 (4):
1251 (1997)Abstract
The stereotypical view of government bureaucrats is that they are lacking in incentives, obsessed with red tape, and probably corrupt. The point of departure of this article is that while such views may well be correct, it is worth understanding to what extent these phenomena can be explained without departing from the standard paradigm where the government is a benevolent social planner. The basic claim of this paper is that it is possible to develop a theory of misgovernance by a benevolent government based on two eminently reasonable premises: one, that a substantial part of what governments do is to respond to market failures; and two, like all other organizations, the government has agents who are more interested in their own welfare than in any collective goals. It has been shown that these problems are exacerbated at low levels of development and in bureaucracies dealing with poor people. The author argues that one need to posit the existence of a welfare-oriented constituency within the government in order to explain red tape and corruption.