Title: POLITICAL TRANSITION, CORRUPTION IN NEW DEMOCRACIES. SPECIAL CASE ALBANIA
Abstract: This paper examines the effect of democratization on income inequality in new democracies country, using data from the World Income Inequality database. We attempt to explain why income inequality rises at much faster in developing nations than in developed ones. Briefly summarized, high and rising corruption increases income inequality and poverty by reducing economic growth ; increase elite political polarization, induce political instability and even threaten the survival of democracy. The paper argue that the key to solving this puzzle lies in a better understanding of the patterns of democratization and the consequences of corruption in new democracies. While democratization ideally takes place after the construction of a solid institutional foundation of rule of law, realistically most developing countries democratize by introducing elections before they have structured a system of accountability. This type of electoral democracy , despite of legitimizing the government, does not hold the ruling elites accountable through an effective system of checks and balances. As a result, corruption becomes rampant at every level. Most importantly, the emergent corruption attenuates the social demands for redistribution during democratization , since corruption leads to tax evasion particularly among the rich and well connected. This evasion in turn reduces tax progressiveness and offsets the welfare implications of the tax system. Additionally , corruption misallocates social welfare and education program spending by redirecting that spending from those who are truly in need to those who are inside the patronage network. In short , corruption enriches a small part of population at the cost of whole society and therefore leads to greater income inequality.
Publication Year: 2011
Publication Date: 2011-01-01
Language: en
Type: article
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Cited By Count: 3
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