View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by ASU Digital Repository Changing Patterns of Corruption in Poland and Hungary 1990-2010 by Jennifer Joan Kartner A Dissertation Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy Approved April 2018 by the Graduate Supervisory Committee: Carolyn Warner, Chair Cameron Thies Mark von Hagen Daniel Berliner ARIZONA STATE UNIVERSITY May 2018 ABSTRACT Political and economic competition, so goes the broad argument, reduce corruption because competition increases the cost of actors to engage in corrupt practices. It increases the risk of exposure, provides non-corrupt alternatives for consumers, and introduces non-corrupt practices into the political and economic domains. Why then, has corruption persisted in the Central Eastern European countries decades after the introduction of political and economic competition in the early 1990s? This dissertation asks how and why the emergence of competition in the political and economic domains leads to a transformation of the patterns of corruption. I define corruption as an act involving a public official who violates the norms or regulations of their office, receives some compensation in return, and thus harms the public interest. I argue that under conditions of a communist past and high levels of uncertainty, the simultaneous emergence of political and economic competition transforms the opportunity structures of actors to engage in corruption. The resulting constellation of powerful incentives for and weak constraints against corruption encourages political and economic actors to enter into corrupt state-business relationships. Finally, the resource distribution between the actors in the corrupt state-business relationship determines the type of corruption that emerges—legal corruption, local capture, or covert political financing. To test the causal mechanism, I employ intensive process-tracing of the micro- causal mechanisms of eleven corruption cases in Poland and Hungary. Using paired comparisons of cases from the same business sector but at different points in time, the dissertation examines how corruption patterns transformed over time in Poland and Hungary. i The dissertation shows that the emergence of political and economic competition changes the opportunity structures of actors in favor of corruption. Moreover, the new constellation of incentives and constraints encourages political and economic actors to establish corrupt state-business relationships. Crucially, I find that the resource distribution within these corrupt relationships determines the type of corruption emerges—local capture where both sides have concentrated resources that balance each other out, legal corruption when a strong economic actor confronts a fragmented political actor, and covert political financing when a weak economic actor faces a strong political actor. ii DEDICATION Dla Babci, ponieważ od niej się wszystko zaczęło. To all the anti-corruption fighters that keep fighting another day. And last, to my first teacher Ms. Bartal, who was convinced I will never pass fourth grade. iii ACKNOWLEDGMENTS I want to thank my committee chair Carolyn Warner for her unwavering support throughout my time as a graduate student at Arizona State University. She patiently and thoroughly reviewed the many drafts of my dissertation despite her busy schedule, and her insightful comments continuously spurred me to new intellectual heights. Her guidance ultimately shaped the direction of my dissertation by encouraging me to think creatively about the topic. And I want to thank the three gentlemen on the committee whose hands-off approach gave me the necessary rope to almost strangle myself and finish this dissertation just a few days after the due date. The members of my dissertation committee were not the only people who enabled this dissertation. I would also like to thank the rest of the faculty and staff of the School of Politics and Global Studies. Without their help, finishing my dissertation would have been much more difficult, if not impossible (as I probably would have missed the deadline to register for the oral defense). I own a special debt to LB, who in her brilliance used reverse psychology to teach me how to act in a professional manner towards my colleagues regardless of the circumstances. At Arizona State University, I also want to thank the Graduate and Professional Student Association and the School of Politics and Global Studies for their generous travel and research grants, without whom I would not have been able to repeatedly fly from Phoenix to Europe, have a roof over my head and a bed to sleep in at night. When talking about money-provides, I also want to mention my Dad who has already paid for three degrees and refuses to pay for more. Dad, I promise I will pay for my Bachelor in Fashion. And my Grandma Heidi, who always knows what is best for me, regardless of what anybody, including me, tells her. iv A special ‘thank you’ also goes to Terry Pratchett for introducing me to his close friend Moist von Lipwig. Moist has improved my understanding of corruption in the most delightful and illuminating way possible and encouraged me on the few cloudy days here in Phoenix. On this note, I also want to thank whoever invented the search-and- replace function in Microsoft Word. Without this function I would have misspelled ‘constraints’ 101 times. Last, but certainly not least, I want to thank Louis, the three Georges, Gregory, Michael, Sigmund, Victor, and all the other actors in this play—thank you for keeping corruption interesting. v TABLE OF CONTENTS Page LIST OF TABLES ................................................................................................................. x LIST OF FIGURES .............................................................................................................xii LIST OF ABBREVIATIONS ............................................................................................. xiii CHAPTER 1 INTRODUCTION ................................................................................................... 1 The Argument & Research Approach ................................................................. 3 Contribution & Significance ................................................................................ 5 Outline of Dissertation ........................................................................................ 6 2 THEORETICAL FRAMEWORK ............................................................................ 10 Concepts of Interest ........................................................................................... 11 Explanation of ‘Patterns of Corruption’ ........................................................ 11 Definition of Corruption ......................................................................... 11 Identifying of ‘Patterns of Corruption’ .................................................. 15 Explanation of ‘State-Business Relationships’ ............................................ 24 Political & Economic Competition ............................................................... 29 Explanation of Process-Tracing ........................................................................ 31 My Argument ..................................................................................................... 33 Contextual Conditions .................................................................................. 34 Causal Claim 1 ............................................................................................... 37 Causal Claim 2 ..............................................................................................46 Causal Claim 3 .............................................................................................. 53 Argument Roadmap ..................................................................................... 58 Limitations & Scope Conditions ....................................................................... 61 vi CHAPTER Page Conclusion ......................................................................................................... 62 3 METHODOLOGY ................................................................................................... 63 Case Selection and Justification .......................................................................64 Country Case Selection. ................................................................................64 Corruption Case Selection. .......................................................................... 68 Polish Corruption Cases. ........................................................................ 73 Corruption Pair 1: Arts & Entertainment Sector. ............................ 73 Corruption Pair 2: Gambling Sector. ............................................... 75 Corruption Pair 3: IT-Sector. ........................................................... 76 Hungary Corruption Cases. .................................................................... 76 Corruption Pair 1: Real Estate Sector. ............................................. 76 Corruption Pair 2: Construction Sector. ......................................... 78 Corruption Pair 3: Energy Sector. ................................................... 79 Drawing Causal Inferences .............................................................................. 80 Research Design Setup. ..............................................................................