By Michalis Zaouras on June 29, 2010

Corruption, is Cyprus different?

There has been quite a fuss lately in Cyprus about this issue, after the accidental exposure of an internal email from AKEL. Surely corruption in Cyprus is not a unique phenomenon. Additionally most of the people while they declare themselves against these practices they act differently when they are in need. As for the last one it is not contradicting at all, since a prisoners dilemma emerge. If everyone choose not to maintain corruption they will be better off from cherish corruption instead.

However an interesting question that arises is whether corruption is necessarily bad. Academia has not established a clear answer. It seems that if governmental agencies fail to deliver the required services corruption is beneficial, since the services are delivered by the corrupted agents. Note that I am not considering the ethical issues of this matter and I focus entirely on economic efficiency.

On the other hand, as an optimist, I refuse to accept that government agencies in Cyprus fail to be productive at all. As a consequence of that corruption in Cyprus has to be destructive. The problem is how to fight corruption. Academia again has been very creative as with ways to overcome it. A second best solution is to introduce competition between agencies. To be more precise allow two different agencies to have the same responsibilities; this at least will lower rents between corrupted agents. Obviously the right way to face this problem is to restructure the public sector by changing the contracts offered to workers in the public sector, invest to fight corruption within the political parties and even change the legal system with respect to parties’ sponsorships and so on. However doing that is not costless; labor unions which most surely control the decision making of political parties will not be easily convinced, but most importantly voters from the public sector will switch political parties if one of the parties tries solely to face this problem.

1 comment:

  1. A great podcast that summarizes the academic arguments on corruption, showing that sometimes it can cut the excessive red tape.

    http://www.npr.org/blogs/money/2010/04/the_friday_podcast_1.html

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