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A Theory of Misgovernance

Abhijit V. Banerjee
The Quarterly Journal of Economics
Vol. 112, No. 4 (Nov., 1997), pp. 1289-1332
Published by: Oxford University Press
Stable URL: http://www.jstor.org/stable/2951272
Page Count: 44
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A Theory of Misgovernance
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Abstract

This paper tries to explain why government bureaucracies are often associated with red tape, corruption, and lack of incentives. The paper identifies two specific ingredients that together can provide an explanation: the fact that governments often act precisely in situations where markets fail and the presence of agency problems within the government. We show that these problems are exacerbated at low levels of development and in bureaucracies dealing with poor people. We also argue that we need to posit the existence of a welfare-oriented constituency within the government in order to explain red tape and corruption.

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