fig. 3 Bribery varies between and within continents

foreign aid is a signifcant source of government revenue where the World Bank and national aid agencies give developing countries billions to spend on capital-intensive projects for improving infrastructure, health and education facilities. The economic criteria that qualify countries to receive foreign aid do not include good governance. In countries rich in natural resources, such as oil, gas and minerals, there is a demand from large multinational corporations for government licenses to extract and sell these resources in world markets. National governors with the political power to grant licenses may do so in exchange for payments that put money that looks big in their foreign bank account but is very small by comparison with the proft a multinational corporation can make. Contrary to the intention of governments providing foreign aid, the hypothesis that follows is: The greater the importance of foreign money to a national economy, the higher the level of national corruption.

Theories of inequality postulate that the greater the inequality in a society, the more political power will be concentrated rather than distributed equally. Ethnic identifcation based on the race, tribe or language is a categoric form of differentiation that can create political inequality between ethnic groups that are in control of government and ethnic groups that are outsiders (Posner 2004). Insofar as public offcials favour claimants who belong to the governing ethnic group, public resources are not delivered by the book. Members of the ethnic group in power can get what they want by using ethnicity as a hook to get around rules, while outsiders have to pay bribes to get what they want. It follows that: The greater the extent of ethnic inequality in a country, the higher its level of corruption.

Many theories of economic inequality assume that those with the most money will be able to translate their wealth into political power and use this power to beneft themselves. However, the implication of this assumption for national corruption is problematic. In economically developed societies people who beneft most from national prosperity may favour governance by the rule of law in order to protect what they enjoy, such as favourable tax policies and the properties and lifestyles of the wealthy. In developing countries offering limited resources for accumulating income and wealth in the private sector, economic inequality can be a consequence of those in high offce using their power to exploit the state’s income and resources. The absence of an unambiguous theoretical hypothesis leaves open to empirical testing what effect, if any, a higher level of national income inequality has on corruption.

Political history and institutions have most impact. The CPI is especially suitable for testing empirically which of the foregoing hypotheses has statistical support, because it covers 152 countries with different political histories and institutions, levels of economic development and dependence on foreign money, and varying in the extent of their ethnic and economic inequality. The hypotheses are tested with an ordinary least squares multi-variate regression that includes eight independent variables. Altogether, the multi-variate regression analysis accounts for 68% of the total variation in the CPI. four infuences are statistically signifcant and four are not (Table 1).

The frst hypothesis is strongly supported. The impact of introducing bureaucracy before 1914 is associated with an increase in a country’s CPI score by 25 percentage points net of all other infuences. This indicates that the practice of governance at the grass roots was altered much less than boundaries of states following the collapse of multinational empires at the end of the first World War. The importance of early bureaucratization is underscored by the way in which it has moderated the impact of its antithesis, the anti-modern Communist system of governance (Rose 2009: Chapter 2). Once Communist regimes collapsed after the Berlin Wall fell, countries that had experienced Prussian or Habsburg early bureaucratization were not trying to create from scratch a bureaucracy that governed by the book. Instead, they were engaged in

Table 1 Contextual infuences on national corruption (dependent variable: National Corruption Perceptions’ Index ordinary least squares regression)

Early bureaucracy Post-Communist Early bur’y * Post-Communist Colony post-1945 Extent democratic foreign aid Resource rents Ethnic differences R squared Constant f-test Beta P-value Change in CPI

25.00 0.000 25 −0.46 0.879 Not sig. −17.1 0.007 −17 −1.95 0.411 Not sig. 3.65 0.000 22 −0.31 0.064 −14 0.00 0.999 Not sig. −2.91 0.514 Not sig. 68.0% 25.6 0.000 38.01 0.000

Note and Source Change in CPI: Estimated change in 100-point CPI if associated independent variable moves from its lowest to its highest value. Analysis of 152 countries with measures available for all independent variables

rebuilding political institutions that had been perverted by the dictates of Communist commissars. By contrast, the successor states of the Soviet Union had only the foundations of the Tsar’s personalistic regime and of a regime governed by Marxist-Leninist dictates rather than an impersonal bureaucracy.

Differences in bureaucratization among post-Communist regimes— eight had an experience of early bureaucratization and 20 did not— means that when the 28 are lumped together as a single infuence in the regression analysis, their collective infuence is not signifcant. However, when an interaction term is introduced that differentiates the two sets of states, the impact is signifcant. Countries combining early bureaucratization and Communist rule have their CPI rating lowered, but it is still higher than countries lacking the former beneft.

The majority of states in the world today could not introduce early bureaucratization because they were colonies or did not exist as states prior to the end of the Second World War in 1945 and then gained independence in the 1950s and 1960s. Imperial rulers tended to tolerate the maintenance of customary forms of grass-roots administration in their colonies in order to co-opt local elites, while introducing a veneer of institutions of modern governance. Contrary to many theoretical hypotheses, colonialism as a form of prior rule does not register a statistically signifcant effect on corruption (Table 1). The experience of countries during colonization is mixed. Even though many of the former colonies covered here, such as Nigeria and Kenya, are near the bottom of the CPI projecting their poor performance onto the mass of former colonies is not justifed. former British colonies in the Caribbean such as Jamaica and Trinidad are in the top half of the CPI ranking. They began bureaucratization while they were still colonies under British rule. By contrast, early bureaucratization did happen in Latin American states that became independent in the early nineteenth century, a period before their Imperial rulers had themselves begun bureaucratizing their own systems of national administration (Rose and Peiffer 2016).

The introduction of democratic institutions is intended to counteract the negative effect on governance of the legacy of the past. freedom House, an international non-governmental organization, measures the democratic credentials of contemporary states by the extent to which they enjoy civil liberties and political rights. Civil liberties give political activists and the press the capacity to publicize corrupt activities of public offcials. Political rights give citizens the power to vote out of