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"Seize the State, Seize the Day" : State Capture, Corruption, and Influence in Transition

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dc.contributor.authorHellman, Joel S.
dc.contributor.authorJones, Geraint
dc.contributor.authorKaufmann, Daniel
dc.date.accessioned2014-08-27T20:34:53Z
dc.date.available2014-08-27T20:34:53Z
dc.date.issued2000-09
dc.description.abstractThe main challenge of the transition has been to redefine how the state interacts with firms, but little attention has been paid to the flip side of the relationship : how firms influence the state - especially how they exert influence on, and collude with public officials to extract advantages. Some firms in transition economies have been able to shape the rules of the game to their own advantage, at considerable social cost, creating what the authors call a "capture economy" in many countries. In the capture economy, public officials, and politicians privately sell under-provided public goods, and a range of rent-generating advantages "a la carte" to individual firms. The authors empirically investigate the dynamics of the capture economy, on the basis of new firm-level data from the 1999 Business Environment and enterprise performance survey (BEEPS), which permits the unbundling of corruption into meaningful, and measurable components. they contrast state capture (firms shaping, and affecting formulation of the rules of the game through private payments to public officials, and politicians) with influence (doing the same without recourse to payments), and with administrative corruption ("petty" forms of bribery in connection with the implementation of laws, rules, and regulations). They develop economy-wide measures for these phenomena, which are then subject to empirical measurement utilizing the BEEPS data. State capture, influence, and administrative corruption are all shown to have distinct causes, and consequences. Large incumbent firms with formal ties to the state tend to inherit influence as a legacy of the past, and tend to enjoy more secure property, and contractual rights, and higher growth rates. To compete against these influential incumbents, new entrants turn to state capture as a strategic choice - not as a substitute for innovation, but to compensate for weaknesses in the legal, and regulatory framework. When the state under-provides the public goods needed for entry and competition, "captor" firms purchase directly from the state, such private benefits as secure property rights, and removal of obstacles to improved performance - but only in a capture economy. Consistent with empirical findings in previous research on petty corruption, administrative corruption - unlike both capture and influence - is not associated with specific benefits for the firm. The focus of reform should be shifted toward channeling firms' strategies in the direction of more legitimate forms of influence, involving societal "voice", transparency reform, political accountability, and economic competition, Where state capture has distorted reform to create (or preserve) monopolistic structures, supported by powerful political interests, the challenge is particularly daunting.en
dc.identifierhttp://documents.worldbank.org/curated/en/2000/09/693317/seize-state-seize-day-state-capture-corruption-influence-transition
dc.identifier.doi10.1596/1813-9450-2444
dc.identifier.urihttps://hdl.handle.net/10986/19784
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 2444
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectADMINISTRATIVE CORRUPTION
dc.subjectADMINISTRATIVE REGULATIONS
dc.subjectASYMMETRIC INFORMATION
dc.subjectBRANCHES
dc.subjectBRIBERY
dc.subjectBRIBES
dc.subjectBUREAUCRACY
dc.subjectBUSINESS ENVIRONMENT
dc.subjectCENTRAL BANK
dc.subjectCOLLECTIVE ACTION
dc.subjectCOLLUSION
dc.subjectCOMMUNIST
dc.subjectCONSTITUENCY
dc.subjectCORRUPT OFFICIALS
dc.subjectCORRUPTION
dc.subjectCOUNTRY AVERAGES
dc.subjectDECREE
dc.subjectDECREES
dc.subjectDEMOCRATIC ELECTIONS
dc.subjectECONOMIC COMPETITION
dc.subjectECONOMIC GROWTH
dc.subjectEXTORTION
dc.subjectFINANCIAL SYSTEM
dc.subjectFIRM SIZE
dc.subjectFIRMS
dc.subjectFOREIGN INVESTORS
dc.subjectFOREIGN OWNERSHIP
dc.subjectGOVERNANCE DATA
dc.subjectGOVERNANCE DIMENSIONS
dc.subjectGOVERNANCE VARIABLES
dc.subjectGROWTH RATES
dc.subjectINSTITUTIONAL REFORMS
dc.subjectINTERNATIONAL DEVELOPMENT
dc.subjectLAWS
dc.subjectLEGAL FRAMEWORK
dc.subjectLEGAL SYSTEMS
dc.subjectLEGISLATION
dc.subjectLEGISLATURE
dc.subjectMEASURING CORRUPTION
dc.subjectMEDIA
dc.subjectMONETARY POLICY
dc.subjectNATIONAL LEVEL
dc.subjectNEGATIVE EXTERNALITIES
dc.subjectOFFICIALS
dc.subjectPARLIAMENTARY VOTES
dc.subjectPETTY CORRUPTION
dc.subjectPOLITICAL ACCOUNTABILITY
dc.subjectPOLITICAL COMPETITION
dc.subjectPOLITICAL CONTESTABILITY
dc.subjectPOLITICAL DYNAMICS
dc.subjectPOLITICAL ECONOMY
dc.subjectPOLITICAL INSTITUTIONS
dc.subjectPOLITICAL PARTIES
dc.subjectPOLITICAL POWER
dc.subjectPOLITICAL STRUCTURES
dc.subjectPOLITICIANS
dc.subjectPRIVATE SECTOR INVOLVEMENT
dc.subjectPROPERTY RIGHTS
dc.subjectPUBLIC
dc.subjectPUBLIC OFFICIALS
dc.subjectPUBLIC SECTOR
dc.subjectREGULATORY CAPTURE
dc.subjectREGULATORY FRAMEWORK
dc.subjectSECURE PROPERTY RIGHTS
dc.subjectSOCIAL COST
dc.subjectSOCIAL WELFARE
dc.subjectSTATE INSTITUTIONS
dc.subjectSTATE POWER
dc.subjectTAX COLLECTION
dc.subjectTRANSITION ECONOMIES
dc.subjectTRANSPARENCY
dc.subjectUNOFFICIAL ECONOMY
dc.title"Seize the State, Seize the Day" : State Capture, Corruption, and Influence in Transitionen
dspace.entity.typePublication
okr.crossref.titleSeize the State, Seize the Day: State Capture, Corruption, and Influence in Transition
okr.date.disclosure2000-09-30
okr.date.doiregistration2025-04-10T09:45:36.011608Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2000/09/693317/seize-state-seize-day-state-capture-corruption-influence-transition
okr.globalpracticeTransport and ICT
okr.globalpracticeFinance and Markets
okr.globalpracticeGovernance
okr.guid537461468766474836
okr.identifier.doi10.1596/1813-9450-2444
okr.identifier.externaldocumentum000094946_00091405494828
okr.identifier.internaldocumentum693317
okr.identifier.reportWPS2444
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2000/09/30/000094946_00091405494828/Rendered/PDF/multi_page.pdfen
okr.sectorPublic Financial Management
okr.sectorPublic Administration, Law, and Justice
okr.themePublic sector governance :: Other accountability/anti-corruption
okr.themeFinancial and private sector development :: State enterprise/bank restructuring and privatization
okr.topicFinance and Financial Sector Development::Microfinance
okr.topicEconomic Theory and Research
okr.topicCorruption and Anticorruption Law
okr.topicPublic Sector Development::Decentralization
okr.topicRoads and Highways
okr.topicGovernance::National Governance
okr.topicGovernance::Governance Indicators
okr.topicTransport
okr.unitGovernance, Regulation, and Finance Division, World Bank Institute; the Public Sector Group, Europe and Central Asia Region
okr.volume1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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