by J. Hellman, G. Jones, and D. Kaufmann (2000)

Corruption has risen to the top of the agenda in emerging countries, particularly in transition. However, existing empirical research has been hampered by the lack of detailed and comparative data. The authors use the data from the Business Environment and Enterprise Performance Survey (BEEPS) to unbundle corruption into its specific constituent components (state capture, administrative corruption, and influence) and examine their particular causes and consquences.

In a decade of transition, fear of a leviathan state is giving way to increased focus on oligarchs who "capture the state." In the capture economy, the policy and legal environment is shaped to the captor firm's huge advantage, at the expense of the rest of the enterprise sector. The evidence suggests that improved property rights protection and civil liberties can significantly reduce the capture economy. The analysis and findings have major implications for policy.

This study is featured in the October 11, 2000 issue of the Financial Times (Martin Wolf Op-Ed). Read the World Bank Press Review Headline: "Avoiding the Trap of Transition", or contact the Financial Times.

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