Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics

Neelambar Hatti ¹, Mason C. Hoadley ²

Affiliations
1 Department of Economic History, Lund University, Lund, SE
2 Center for Language and Literature, Lund University, Lund, SE

Abstract

During the past few decades systemic corruption has come to be seen as a significant factor which hinders socio-economic development, posing a serious threat to the political, economic and social well-being of many developing and transition countries. Under conditions of systemic corruption, many institutions, rules and norms of behaviour have become adapted to a corrupt modus operandi. Public officials and other agents not only follow the predatory examples of the elite classes, but even take instructions from them. In this context, the role of middle men in corruption is analysed here through the lens of a market or bazar model of interpersonal behaviour. It is the market of the corruption bazar rather than the traditional bazar which reigns supreme. The former is characterized by, among others, market distortions in the form of limitations on competitiveness and the free reign given to entrepreneurial intermediaries whose field of operations is seemingly unaffected by political outcry or even 'good laws', all reinforced by traditional values based on 'affection corruption'.

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Neelambar Hatti ¹, Sheetal Sonawane ²

Affiliations
1 Department of Economic History, Lund University, SE
2 Gokhale Institute of Politics and Economics, Pune, IN

Abstract

Decentralisation is considered a potentially effective strategy for participatory development and delivery of assistance, particularly in the context of rural development. It contributes to reduction of inequality and poverty and, thus, promotes local democracy. India and Indonesia have considerable social and economic inequality and poverty. Though both countries have opted for devolving power to local governments, they differ in their approaches. India went in for 'gradualist approach' emphasizing Panchayati Raj Institution, whereas Indonesia chose 'big bang approach' emphasizing the ideology of svadaya gotong royong (community self-help). This has resulted in a more efficient delivery of public services in Indonesia, but at the cost of democratic freedom. In both the countries there is an urgent need to improve the mechanisms for adequate and equitable fiscal transfers, thus enabling the poorer regions to fully utilize their growth potential. This would have a positive impact on poverty.

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