Investigating a “New Paradigm” on Strategy against Corruption in the Private Sector *

Abstract

This paper's main objective is to investigate a “new paradigm” on strategy against corruption as proposed by Kang, Chul-Kyu and Lee, Jae-Hyung(2003)(hereafter Kang and Lee) in private sector. A “new paradigm” is characterised by shifting the equilibrium point of corruption downward, due to the external shocks(i.e., regulatory reform, accounting transparency, education, and information technology) as well as a severe regulation(i.e., exposure and punishment). On the basis of this study, policy makers should choose an objective by scientific methodology; Scientific measurement enhances understanding which contributes to the control, and thus facilitates improvement. This suggests that scientific measurement or evaluation is essential. Using a cross-sectional data of 20 countries from the 2002 International Management Development Yearbook and the 2002 Opacity Index by Price Waterhouse Coopers the empirical results are consistent with a “new paradigm” in private sector. It is also evident in cross national comparisons that Korea's fair trade policies such as accounting transparency in private sector as well as regulatory reform, together with a severe regulation such as exposure and punishment, can make a substantial contribution to her national competitiveness.