Essays in Political Economy
Edited by Susan Rose-Ackerman and Paul Lagunes
Chapter 3: Political connections and commerce—a global perspective
What are connections worth? Conventional wisdom, amply backed by shocking anecdotes in just about any country one might consider, is that businesses profit from all manner of political ties. There are, of course, numerous means of influence that companies have at their disposal: they lobby politicians, make campaign contributions, appoint former (or current) politicians to their boards or executive teams, place former executives in influential government posts, and pay bribes to have things their way. How much is this conventional wisdom backed up by evidence, and to what extent does it reflect misconceptions borne of high-profile examples rather than broader realities? Indeed, the very existence of public enforcement actions that create the perception of corruption could indicate a judicial system that is generally in good health: In Israel, for example, at the time of writing a former prime minister and former president were serving prison sentences for accepting bribes. Does that mean the Israeli economy is corrupt, or is it a case of a system that is effective at catching and punishing the few renegades in politics? Global comparisons are further complicated by the fact that many channels of influence are perfectly legal, and the latitude in exercising them differs vastly across countries.
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