Social welfare, corruption and credibility: Public management's role in economic development

Jack H. Knott, Gary J. Miller

Research output: Contribution to journalArticlepeer-review


Economic development requires that investments by entrepreneurs are not subject to expropriation by government. Unfortunately, public agencies often serve as the instruments by which political elites engage in corruption and extracting rents from the economy. The question is how to design institutions that credibly commit to a stable system of guarantees of property rights and contract enforcement. Principal agenttheory and the new public management favor greater accountability of public managers to elected officials or eliminating public agencies through privatization. We argue for institutional designs that provide a degree of public agency autonomy. We show that public agency autonomy is a by-product of the competition between elites in democracies with multiple veto players. We show that transparency, professionalism, and legality help ensure that public managers do not engage in rent-extraction. The institutional design problem is how to induce public managers to serve the public interest without being fully responsive to elected political officials.

Original languageEnglish (US)
Pages (from-to)227-252
Number of pages26
JournalPublic Management Review
Issue number2
StatePublished - Jun 2006


  • Autonomy
  • Bureaucracy
  • Corruption
  • Credible commitment
  • Political economy
  • Professionalism
  • Reform
  • Rent-seeking

ASJC Scopus subject areas

  • Management Information Systems
  • Management of Technology and Innovation


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