The effect of coca and FDI on the level of corruption in Bolivia

This paper written by Antonio N. Bojanic analyzes the causes of corruption in contemporary Bolivia. It argues that, along with the well-documented observation that richer countries tend, on average, to be less corrupt than poorer ones, corruption is directly dependent on FDI inflows, with higher levels of FDI associated with lower levels of corruption and vice versa. Additionally, the findings reveal that a less controlled, more permissive market for coca leaves actually reduces the level of corruption in the country, supporting the hypothesis that the way to a less corrupt Bolivia is by lowering government intervention into this controversial market.

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Latin American Economic Review aims to be the leading general interest journal on topics relevant to Latin America. The journal welcomes high-quality theoretical and quantitative papers on economic, social and political-economy issues with a regional focus. Articles presenting new data bases or describing structural reforms within a rigorous theoretical framework will also be considered. A few (illustrative) examples of topics that may be of special interest to this journal include: inflation, informal sector, corruption, crime, drug policy, unions, social exclusion, price controls, energy and environmental policy, natural resources, and technology transfer.