Corruption, defined as the “abuse of entrusted power for private gain,” has been a recurrent theme throughout South Korean (hereinafter referred to as Korean) history. Since Korea joined the Organization for Economic Cooperation and Development (OECD) in 1996, it has continuously been ranked among the lowest 20th percentile in Transparency International’s Corruption Perceptions Index (CPI) barometer. The term of corruption primarily refers to the public sector. Therefore, Shleifer and Vishny offer a more narrow definition of corruption as being “the sale by government officials of government property for personal gain.” Corruption occurs at the interface between the public sector and the private one, whenever a public official is endowed with the discretionary power over the distribution of goods and services. The consequences of corruption are multifarious, including the lowering of investment and economic growth, a loss of tax revenue, adverse budgetary consequences, for instance by reducing the level of tax collection, and a reduction of the effectiveness of aid flows in developing countries and distortion of the composition of government expenditures.
One sector that is known to be very susceptible to corruption is the construction sector, covering major public investment projects. The execution of these projects is usually contracted out by the government. Rent-seeking is among the key components of any corrupt act and large infrastructure projects are characterized by huge size and high capital intensity, making corruption in this sector more profitable than in any other sectors. In the following paper, the problem of corruption in major infrastructure projects will be analyzed with a special focus on the water sector. Chapter two offers an analysis of the problem of corruption using two economic approaches, the principal agent theory and a game theoretical analysis of the problem and its solutions. Special focus will be led onto the problem of corruption in major infrastructure projects, as well as the introduction of the integrity pact as a device to combat corruption in this sector. Chapter three presents a case study of the Korean water resource management sector and its efforts to combat and prevent corruption.The last chapter evaluates the initiatives taken by Korean society to combat and prevent corruption in the water management sector. It draws conclusions upon this evaluation, recommendation are being made.
Table of Contents
1. Introduction
2. An Analysis of Corruption from the Perspective of Economic Ethics
2.1 Burdening Corruption vs. Unburdening Corruption
2.2 An Analysis of Corruption from the Perspective of Economic Ethics
2.2.1 Principal-Agent Theory
2.2.2 A Game Theoretic Analysis of Corruption
2.3 Corruption in Infrastructure Projects
2.4 Integrity Pacts
3. Case Study Republic of Korea
3.1 Country Profile South Korea
3.2 Corruption in Korea and Anti-Corruption Measures in the Public Sector
3.3 K-PACT
3.3.1 History, Development and Organization of the K-PACT
3.3.2 Achievements and Limitations
3.4 Integrity Pact for Water Resource Management
3.4.1 Water Resources in Korea
3.4.2 Establishment of an Integrity Pact
4. Evaluation and Recommendations
4.1 An Evaluation of the Progress made by Korean Society
4.2 Additional Measures and Recommendations
5. Conclusion
Objectives and Core Topics
This thesis examines the prevalence of corruption within South Korea's water management sector and evaluates the effectiveness of anti-corruption initiatives, specifically focusing on the implementation of integrity pacts. The research question addresses how structural corruption in infrastructure projects can be mitigated through economic ethics and decentralized governance frameworks.
- Theoretical analysis of corruption using Principal-Agent theory and Game Theory.
- Evaluation of the historical and institutional development of corruption in South Korea.
- Critical review of the Korean Pact on Anti-Corruption and Transparency (K-PACT).
- Strategic assessment of integrity pacts specifically applied to water resource management.
- Development of policy recommendations to enhance anti-corruption efficacy in public procurement.
Excerpt from the Book
2.2.2 A Game Theoretic Analysis of Corruption
Similar to other situations, where individually rational behavior leads to an undesired outcome for the collective, the problem underlying corruption is a social dilemma. Social dilemmas are situations in which individual rationality leads to collective irrationality. Even though there is no ambiguity on the actions of a single individual, when trying to maximize the own pay-off, the collective is hurt by the outcome. The best known version of such a dilemma is the “tragedy of the commons” as introduced by Hardin. Here, a common grazing area is used freely by the dairy farmers of the town. It is obvious, that every farmer, trying to maximize his own outcome, has an incentive as to increase the number of cattle he grazes in this area. Yet, if all farmers keep increasing their number of cattle, they will eventually overgraze the commons, thereby diminishing the collective interest.
Situations characterized as a social dilemma share one distinct feature: a deficient equilibrium. This equilibrium is deficient due to the existence of at least one other outcome, in which every player is better off. However, it represents an equilibrium since no player has an incentive to change his behavior. A group of players facing a social dilemma might be able to understand each other’s decision and realize the dilemma itself, yet may not be able to change their behavior as to escape the dilemma. The following model shows the social dilemma underlying the phenomenon of unburdening corruption and deduces strategies on how to solve the dilemma situation and move to an efficient equilibrium.
Summary of Chapters
1. Introduction: Outlines the persistence of corruption in South Korea and introduces the economic approaches utilized to analyze it within the infrastructure and water sectors.
2. An Analysis of Corruption from the Perspective of Economic Ethics: Provides a theoretical framework for understanding corruption through Principal-Agent theory, Game Theory, and transaction cost analysis.
3. Case Study Republic of Korea: Documents the institutional history of anti-corruption reforms in South Korea and provides a detailed analysis of the K-PACT initiative and water sector challenges.
4. Evaluation and Recommendations: Critically assesses previous anti-corruption efforts in Korea and offers specific policy recommendations, including the adoption of education and targeted integrity clauses.
5. Conclusion: Summarizes the findings, highlighting the limitations of broad-scope anti-corruption pacts and emphasizing the necessity of targeted, multi-stakeholder approaches.
Keywords
Corruption, Economic Ethics, South Korea, Water Management, Infrastructure Projects, Principal-Agent Theory, Game Theory, K-PACT, Integrity Pact, Transparency, Public Procurement, Social Dilemma, Self Governance, Anti-Corruption, Institutional Reform
Frequently Asked Questions
What is the primary focus of this research?
The work investigates the systemic challenges of corruption in South Korea, specifically focusing on the water management and infrastructure construction sectors from the perspective of economic ethics.
What central themes are explored in this thesis?
The core themes include the theoretical mechanisms of corruption (Principal-Agent and Game Theory), the effectiveness of government-led anti-corruption reforms, and the functional role of integrity pacts.
What is the main objective of the study?
The objective is to evaluate why previous efforts like the K-PACT faced difficulties and to propose more efficient strategies, such as sectoral integrity pacts, to prevent corruption in water management.
Which scientific methodology is applied?
The author utilizes an economic analysis approach, employing Principal-Agent models to explain the incentive structures behind collusive behavior and Game Theory to demonstrate why corruption persists as a deficient equilibrium.
What is the scope of the main analysis?
The main part covers theoretical foundations in chapter two, followed by a detailed case study of the Korean public sector and water resource management institutions in chapter three.
Which keywords define the scope of the study?
Key terms include corruption, economic ethics, South Korea, K-PACT, integrity pacts, transparency, and public procurement.
Why did the K-PACT initiative struggle to sustain itself?
According to the analysis, the K-PACT lacked clear institutional enforcement and suffered from a lack of cooperation among the different involved sectors, ultimately becoming vulnerable to shifting political ideologies.
How can corruption in water infrastructure be more effectively mitigated?
The author suggests moving away from broad, centralized agreements toward target-oriented integrity pacts that explicitly include private stakeholders and utilize differentiated penalties to alter the incentive structures of potential wrongdoers.
- Quote paper
- Annette Nölle (Author), 2010, Anti-Corruption Initiatives for South Korean Water Management, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/179632
