Economic Analysis On Cause Of Corruption And Research On Establishment Of National Integrity System

The paper discusses the definition, origin, foundation and effects on economics of corruption, analyzes the decision making of corruption providers and demanders, explains principal-agent problem from a economic perspective, and provides some suggestions on combating corruption. It points out that some social institutional deficiencies are the main causes of corruption, that the government monopoly over political and economic resources lays the material foundation of corruption. It notes that the asymmetry between returns and costs of anti-corruption provides the direct inducement to greater corruption, and that the corruption might be the result of a rational choice given the significant differences between benefit and cost of corruption within a given society. In order to combat corruption, it is core to implement horizontal accountability, and it is essential to establish a National Integrity System while aiming at carrying out power supervision. In China anti-corruption needs to reduce the government power and percentage of state-own property; to downsize government organizations and open up administrative procedures; to refine the current legal system and offer enforcement strictly on corruption.