Market reforms and corruption in Latin America: new means for old ways

Many liberal economists hail market-oriented reforms as a means to combat corruption in emerging Latin American democracies with state-led economies. Such arguments assume that reforms like privatization and market deregulation by definition will eliminate the politicians' ability to use state enterprises and government regulations to their own personal advantage. However, there has been little academic scrutiny of how these reforms have been actually implemented in Latin America. In this article, we contend that, unless market reforms are pursued in a context of transparency, they can be used as new means to pursue old corrupt ends. We begin by constructing an actor-centered model of corruption as a function of willingness and opportunity. We then develop two hypotheses regarding die influence of economic reform on the opportunity structure for corruption: executive discretionary power will increase, and the modalities of corruption will adapt to put the economic reforms to corrupt use. An analysis of Argentina, Brazil and Venezuela lends support to our hypotheses. The article concludes with a consideration of the implications of these findings for the future of corruption, economic reform and democracy in less developed countries.