This article probes the relationship between neoliberal economic
policies and political corruption, focusing in particular on the impact
of trade and investment policies, regulatory policy, and the overall
size of the public sector on corruption. Using a large cross-national
data set from the mid- to late 1990s, we test the neoliberal hypotheses
that market-oriented economic policies are associated with lower levels
of political corruption, and state intervention in the economy with
higher levels. Consistent with the neoliberal argument, we find that
open trade and investment policies and low, effective regulatory
burdens do correlate with lower levels of political corruption.
However, we find no consistent relationship between the aggregate size
of the public sector and political corruption. While the neoliberal
hypothesis on political corruption has initial empirical support, its
lessons cannot be applied wholesale. Market-oriented states may be less
corrupt, but interventionist states, as measured by public spending,
are not necessarily more corrupt.Previous
versions of this article were presented at the annual meeting of the
International Studies Association, New Orleans, La., March 24–27,
2002; the Seminar on U.S. and World Affairs, Hoover Institution, Stanford
University, Palo Alto, Calif., January 2003; and the Seminar on
Comparative Politics, Department of Political Science, Stanford
University, February 2003. The authors thank participants at each of
these venues for their valuable comments. Alberto Díaz-Cayeros,
Chappell Lawson, Armando Razo, and three anonymous reviewers provided
especially useful suggestions. The usual disclaimers apply. Gerring is
grateful for financial support provided by the Institute for Advanced
Study, and Thacker for the support provided by the Hoover Institution,
Stanford University. Both Gerring and Thacker are thankful for support
from the Frederick S. Pardee Center for the Study of the Longer-Range
Future, Boston University.