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| Author: | Marcouiller, D. Young, L. |
| Title: | The black hole of graft: the predatory state and informal economy |
| Journal: | American Economic Review
1995 : JUN, VOL. 85:3, p. 630-646 |
| Index terms: | INFORMAL ECONOMY PUBLIC EXPENDITURE PROPERTY OWNERSHIP |
| Language: | eng |
| Abstract: | Economic activity is enhanced by a stable social and legal order which enforces property rights and contracts. Hence, citicens are willing to pay taxes to a government which sustains that order. However, governmental powers can be abused to appropriate some of the economic surplus of an ordered society. Indeed, in states with inadequate democratic checks and balances, the apparatus of orderly government is all too often hijacked by a predatory oligarchy who siphon the national treasury and transform government bureaus into bribe-collection agencies which impede legitimate business. Excessive graft by the predatory state induces workers to secede from the formal economy. |
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