Development strategies are shifting from policy reform to institutional reform, including the control of corruption.
As we learn that economic policy reforms are not enough for economic success, thatdemocracy is not enough for political success, we focus on the institutions through which economic and political activity are carried out and mediated.
Regarding institutions of the public sector, we do not yet have consensus on the labels.
We encounter overlapping concepts such as governance, public administrative systems, institutional development, and administrative adjustment.
Within five years there will be a more stable set of concepts and texts and a template to guide reforms in this domain.
Perhaps even more than in the case of policy reforms, institutional reforms take place in contexts that interact with advisable measures.
Cultural, historical, and political variables probably matter a lot to the correct choice of mechanisms for fighting corruption.
Every country will find its own solutions.
Moreover, in the emerging domain of institutional adjustment, data are scarce.
We find few well-tested propositions about what happens when reforms are tried under such-and-such circumstances.
We therefore proceed on the basis of success stories and analogies to the developed countries and to private business.
Importantly, we also can build on new theoretical developments (agency theory, public choice, industrial organization, finance in economics; new bureaucratic theories in public and business administration).
Is emphasized the agency theory (more broadly, the new theory of the firm) coupled with case studies of success.
Substantively, is emphasized three generic reasons why public-sector institutions often fail: incentive myopia, corruption, and inappropriate administrative integration and centralization.
So, the problem of fighting corruption (and more generally of what might be called administrative adjustment) is difficult: unclear concepts, many interaction effects with local contexts, metaphors and models from many divergent areas of economics and elsewhere, few established estimates of "parameter values.
" Despite these complexities, the argument for administrative adjustment is intuitively powerful and empirically plausible.
Corruption is clearly one of the two or three major problems holding back economic and political advance in most developing countries.