Two sides of the coin: exploring the duality of corruption in Latin America

Abstract

The ambiguous phenomenon of corruption has long been the cause of great theoretical debate in economics. By using Structural Equation Modelling, with the two types of corruption as a latent variable, this paper employs causal and indicative variables to the Latin American region to test for rent seeking and systemic corruption during 1980–2018. The findings provide evidence for two types of corruption, one generated by greed, and the other a solution to market failures. Such results support the view that corruption encompasses a complex set of social behaviours that may require a stronger definitional approach.