 Okay, good morning everybody. Thank you for sending our Turkish host of Camry, me, and us here. We have to talk about production this morning and the way I want to prevent it to you. It's too full, actually. I'm going to give our presentation through section. The first section is very big. A little more on forgiveness inside of our definitions. Then I'll go quickly into the literature and then perhaps the most exciting side is going to be what can we do, and what can we propose in order to have, I wouldn't say a new vision, but a new way to look at the data and the fact that evidence we are in production. Now, when it comes to definitions, the first problem is that the standard literature usually looks at corruption in two ways, which are basically the same thing. One, they define corruption as broad public officials. The underlying assumption is that what they would do without corruption practices would be perfect basically. So anything which interferes with the perfect bureaucrat isn't the same data. The second thing is that even the bureaucrat can be the second one needs to look at it, because the bureaucrat can be bad and therefore he uses his own public office for prime agendas. Once again, the basic notion is that we have a deal between a prime agent and a public agent, whereby the public agent really breaks the rules again by money, which is accepted and therefore the legal framework isn't being approached at all. Once again, the underlying assumption is that the underlying legal framework is more or less efficient, optimal, wonderful, perfect, flawless, whatever. There are a number of problems with these definitions. I've already mentioned one is the perfect perfection assumption behind it, and this is by no means guarantee. Second thing is that our corruption is by no means exclusive to the public sector. It's not restricted to the public sector. You can have surely an interaction between the private and the public sector, which is what people usually look at, but you can also have corruption in the normal private case, something we're not trying to look at. We're not going to analyze today for the reason of your behavior. We can have a corruptional sort of non-sufficient stuff. You don't really have only the state. You have various natives in the states that you have bureaucrats, and various natives within the bureaucratic system, and you have politicians, and sometimes politicians are not the same kind of bureaucrats. You can also have interactions, deals, between politicians on one hand and the other person on the other hand. The reason why I'm not going to go into private deals is that that's not a particularly problematic passion, is when you have a manager in the private company, a corrupt manager in the private company, what's actually doing is bringing a contract between the shareholder and himself, and therefore it really becomes forward. That's the soft big issue, and the market could take care of that. I'm not saying that in the private production asset, what I'm saying is that if you will do it, that's a corrupt company who will drive you out of the business, and therefore it brings a limit to corruption, and the limit to corruption is going to be lower, the lower the normally bad experience, so being the competition to take care of corruption. I'm not saying that corruption will be driven to zero, I'm saying that it will be kept within limits. When you have a department here, issues, then corruption, it goes to a private policy, because there are no forces that spontaneously put in the court when restraining. So I'm leading a private department, a private story, as a sign. The other thing which the standard definition has problems with is that it does not clarify the distinction between the guarantee and the judgments. There are situations where you have corrupt practices that are not classified as corrupt practices because they are combined with the law. That is, if you have the legislation as in the law, which is the outcome of corrupt practices, that doesn't show up in the statistics because after all what happens later is combined with the law. That doesn't mean that you have legitimate practice, it just means that you have legal procedures. So the standard definition doesn't make the distinction between legal and legitimate practices, which is a kind of a tension story because corruption really includes both areas of analysis. The third or fourth shortcoming of the standard definition is that corruption excludes many sorts of legal practices that have different economic implications. For instance, remedy seeking is the main issue at stake and if you do not consider the corruption at the same time as remedy seeking, you get what the decisions would cause towards correlation problems and therefore your specific results from the problem. In my view, a better definition, which is certainly found in the literature, is looking at corruption as a result of a principal agent problem. That is, a situation where the agent breaks a contract with the principal by dealing with a third party. In particular, you have a situation where an agent receives a reward from a third party and he receives that reward from dealing with a third party and the deal is at least partially also the deal he has with the principal. You just have one more life case, which is next, of course. That is, what is the reward of nepotism, femininity, perhaps long-term feminism, and that's really a minor story. And what I'm not into thinking about is the principal agent problem because this is what's going to drive it and drive us to the next 20 minutes or so. So, morality in the prior story, I'm not going to go too much into legal aspects because I'm not interested in this. The legal aspect, if you have a principal agent contract, and the legal aspect, which is legally valid, for instance, what happens in many regulatory issues, corruption is always there because you have a legal rule which is legally being issued because parliament, government, bureaucrats have the power to put a sentence single that whatever goes against the legal question and has monetary transfers involved is going to be the question, but that's not the point. The more relevant point from a political standpoint is the moral question. And of course, morality and autonomy depends on our freedom. So, as the precarious notion of freedom is a question of freedom or coercion. But if you are a mainstream analyst, you might have other notions of freedom, you might say freedom of key, freedom to contribute to the common good, freedom to comply with our government parties or legislative plan. So, morality is a tricky issue there. What we would say is that if the principal agent contract is immoral, because, for instance, we never signed the constitution because we never went to vote and therefore we never gave our consent to any kind of social contract, then whatever the principal agent contract we have has no moral force. Therefore, there is no moral, so there is no contract infringement or contract breakdown. What is more relevant, so this is the end of the first part, but the basic point of my first point is the basic point of the first part is that definitions are kind of positive and hazy and bad for two reasons. A, they do not focus on what is the notion of the moral content of the principal agent contract regarding a state-of-the-art hand, but in addition to bureaucrats, bureaucrats and individuals. And B, the standard definition forgets about really is part of the wrong tree because they might be the question of legality and legality is another connection. So, corruption also involves another connection. So, you will go nowhere. Let's look at the figures. The standard literature looks at one set of figures on it, that is, they have one A. The A is to evaluate the consequences of corruption on GDP, from the GDP levels, most of the time. Sometimes they ironize GDP growth rates and they carry out more sophisticated romantic exercises, trying to find a correlation between corruption on the one hand or GDP growth on the other hand. Unfortunately, other goals are totally ignored. I'm going to record two, but just for you to know what other goals could be. You can have social networks, for instance, for distribution. Even the quality people who might appreciate the distribution might think that the distribution for corruption is better than the distribution for other means. This is certainly an asset to the literature. Political civility, political accountability, which I'm going to ignore, is equally ignored by the literature. The difference is that I thought I'm going to do it, and I apologize for that. Basically, we might have situations, central authoritarian countries, where you want to have rise, because otherwise, you have more accountability by bureaucrats at all levels. Therefore, we're willing to change the rank-seeking against else or non-operability, which does not rule out rank-seeking, but a much larger step. So, instead of literature claims that corruption is usually bad because it is illegal, which is some kind of definition, and because it is morally bad since it reflects existence or creates dishonest ages, bureaucrats, but not only bureaucrats. As a bureaucrat, without corruption, we're perfect on the welfare of other people's wealth. There are exceptions in literature, and the exceptions are that corruption is good or intolerable if it reduces transaction costs. That is, if it is a way to circumvent bad laws and bad policies. So, the idea is that if you have bad laws making corruption is a way to reduce the cost of those bad laws, and therefore, NBA is acceptable. It is a second best solution, of course, in this case. Therefore, you have the wide range of statistical results, and this is and this is, they say, come to the very recent literature. And you have basically, in the middle of the argument of looking at, you have people who carry out exercises and come out with the results that you know even countries with literally economic freedom, corruption is bad. The idea is that if you have literally economic freedom that reward corruption is low, therefore, corruption absorbs the extra sources in activities that give you very different benefits. The idea is if you have literally economic freedom, you don't have many opportunities. That is, either you drink this bottle of water or we have no water. So, corrupting people in order to have this bottle of water does not improve the situation because you don't have a chance to choose among many bottles of water. So, corruption absorbs resources into an activity that does not open up the spectrum, the range of entrepreneurial activities into which you might engage. So, I repeat, when you have literally economic freedom, you have low income, and when you have a good amount of freedom, it means that you don't have opportunities to use, to allocate resources in more effective ways. Therefore, corruption is just a dead weight loss. The alternative is that people say, no, this is another range of statistical results made from literature. They say, looking for countries, corruption is good because the problem with low income countries is they have very bad low income. Therefore, if you carry out poor practices, you can avoid the consequences of low, and therefore, you can do better things than what we all want for the future. So, the difference is that in one act, you define where you believe that low income is generated by literally economic freedom. In the other case, you focus on the institutional products. Basically, you say you have a bad institutional product, and the content is barely specified on what it is. That is, it is not quite an economic investment, economic freedom, and bad institutional product. It is not the same thing. In one case, lack of economic freedom means lack of alternative. In the other context, bad institutional content means bad loss. So, depending on which issue you emphasize in your models, in your geometric regressions, they didn't have different sources. One case, corruption is good, in the other case, corruption is bad. The opposite applies to high income countries. In my corrupting officials, you have access to superior to better application of resources, then corruption is good. If by corrupting officials, you disallocate resources, then corruption is bad. In general, it is just, in general, it isn't similar in developed countries, corruption is bad because the idea is, if the country is about, it means that no making use of it. Therefore, all attempts to interfere with the current legal context are going to affect efficiency. Therefore, let's make it bad. The minority of people, so they find that it can be good, because in high developed countries, you have a lot of economic freedom, which means you can have a wide range of alternatives. Therefore, by going through corruption, you've woken up these latent range of alternatives, which you can exploit in your entrepreneurial engagements. So, once again, there is a number of uses in the definitions. And as a result, you have a number of uses in the results. If you look at the last issue, a lot of the ones, yes. In general, you have two hydrocosm of corruption, one next to the other, and then there are opposite results. And they both come up at the end of very complex environmental estimates that the main difference between them is that they look at corruption by emphasizing two different notions of corruption and two different institutional problems. In fact, the problem is that you have to decide how they have a line, whether you're emphasizing the rent-seeking component in the corruption phenomenon or the local enforcement component. If you emphasize the rent-seeking story, that is, when the principal agent contractor adverts to is about rent-seeking, then corruption might reduce expensive rent-seeking and replace it with cheaper rent-seeking. If that is the case, then corruption is good. So, I repeat, suppose that we are starting from a situation where rent-seeking is pervasive and rent-seeking is big-scale currency, then corruption is a way to reduce those rents by having more efficient entrants driving out of the market less efficient rents. If that is the case, then the amount of rent-seeking in the economy drops, and therefore the environment improves, and therefore you will have better results in terms of community. However, when the principal agent contractor is about efficiency, that is, you believe that you don't have rent-seeking, or you believe that you originally have a low level of rent-seeking, then corruption is better. So, because you introduce that sort of problem and start rent-seeking opportunities abroad for corruption, so the basic issue is that you have to tell me before how much rent-seeking you start from, and as a consequence of the rent-seeking environment before the corruption has such a space, then I tell you the results of corruption. The other possibility is to look at the lower enforcement problem. The idea is that if lower enforcement is bad, the agent can't perform, then the enforcement has to be right. This says corruption enhances to include the rule of law, rule of law, and it's probably the right location for the current employment. That is, corruption can be beneficial. If the principal agent contract is loosely defined, once again, corruption defines the rule of the game that the initiator has not defined, and therefore it gives reference points to operations, and therefore corruption is given. If the principal agent contract is well specified, and lower enforcement is issued, then corruption is again banned because it orders the original contract. Once again, tell me what your assumptions regarding the lower enforcement are, and I'll tell you whether corruption can be beneficial for the project. So basically, the confusion in the current literature in my view is due to the confusion of the notion of corruption, because they put together these two notions from emphasizing rent-seeking, the other emphasizing lower enforcement, and then depending upon which sign you don't want to investigate, you can have different results. The fact that you call the two phenomena into the same way, of course, adds to the confusion. I suggest a different way to look at the whole history by trying to take into account this rent-seeking story. And my suggestion is to define corruption in two different stages. You can call it first degree corruption and seventh degree corruption. You can have first degree corruption when the ventilation, that is, the political body, is involved, that is, you have on the one hand top politicians, the bureaucrats, on the other hand, you can have other top politicians, bureaucrats, companies, or interest groups. Basically, this is legal corruption because it does ask the politicians to do something really that is to deal with rents. But it is legal because, after all, it involves two parameters. You don't have to pay these things. You just have to make sure that they have parts and you don't have to pay them to persuade them that by doing A or B, they're going to deal with the next sections. Then you have second degree corruption, which is when a smaller state corruption is involved. It is minor play. The players are in the game. And minor play is in say small properties, individuals, low rent bureaucrats. Now, let's look at the next section, first degree and second degree corruption. Let's see how the rent-seeking story works from this perspective. If you focus on rent-seeking, which is carried through carry out through legislation. First example, and by far the most important example is through a regulation. First degree corruption, but it's a legal corruption, is usually bad. As you know, regulation is bad. Even in dynamic context, it does not include things. If you have a product that is regulated in this way, and you have companies that are willing to play part in order to get into the industry and change regulation, you do that only if you are able to produce the rents to the bureaucrats and to the politicians. So overall, that what it works as, don't increase. There are two important sections of which are very big. One is strategic regulation. That is, if you are a politician, you're not interested in getting the product right now. What you're interested in to begin with is to create a market for products. So you don't really care whether you regulate industry or it's free. What you're here for is to regulate something so that somebody would come up to you and offer you a product to do something different. I would increase regulation, you increase the regulation. If you increase regulation, that doesn't make you honest. It just gives you a possibility of being a free market where you can run. But that is not a sense anymore. Now with strategic regulation, you set up areas you might create rents in opportunities, and rather than create rents, you make a product you could, of course, because look at the developing country. Suppose that I am a humanitarian leader of our country, and I decide to ban all kinds of foreign investors. And I would do that on stage one. But the day afterwards, somebody would come up to me and say, how much do you want in order to let me in? I tell you my price, you come in, is it good or bad for the country? Of course it's good, because you know, we're a more common operating company in the country. And part of the profits have been taken away from the company and they go to the leader of the country. But overall, growth rate increases, so GDP is the growth rate of the population wherever anyone goes up. So in this case, when you have strategic regulation to begin with, corruption comes in, then you have corruption induced by strategic regulation. This is good. It does not appear in the statistics that is what appears in the company that brides me, that you don't have my legal practices that have been enforced when I began with my regulatory policy in the beginning. So if you look at the current statistical analysis on this, you have piles and piles because you just see one side of the picture. And if you look at just one side of the picture without taking it to the other side of the picture, you forget about the opportunity cost. And therefore, you don't know what we have presented on the big, the same cost for the governments. Another possibility of beneficial corruption, firstly, is when you have large differences in predictivities between the incumbent red seekers and the rioters, which again, repeat my example with slightly different words and cut the same truth. It's good if a good nomenclature comes in and gets out when the good red seeker and the fishing red seeker is usually better than an inefficient red seeker. The reason is that you can pay a higher price, but it gets in, but still creates more wealth than the inefficient incumbent red seeker. In this framework, secondly, we have corruption is good, if in many ways, in fact, a large scale red seeker is first degree corruption. Once again, the statistics concentrate on second degree red seeker and forget about first degree red seeker. So, of course, if you take first second degree red seeker in its own small scale rise, you say it's there. But if you don't compare it with the benefit, which is reducing costs of first degree red seeker, then if you do that, that is a really good comparison, then an outcome instruction gets obvious, and it can actually be possible. Similar comments apply to law enforcement for the defined laws. So, I just read it out to conclude. Main street economics got interested in corruption in the 1990s. Basically, across the World Bank of the Air Force had found out that their development policies were a total disaster, and therefore, they started saying that the usual development policies had to do, had to be revised in the light of institutional development. They understand that institutional development laws best design perfect institutions. And the reason why we don't have successful development policies is that institutions, agencies, regulators, are not perfect enough. So, they say one way to make them perfect is to never have to make corruption. They're rather specific, and what they say, you basically, we don't think so. Whenever you have better policy making, and lack of a number of freedom, we remain in that economic performance. This is important. In particular, they show that corruption affects investment, and investment affects growth. And, of course, that is theoretically weak and factoring false. The reason being that corruption does not necessarily discourage investment. If you are a small entrepreneur, if you have to comply with all the regulations in place, say, in Italy or in other industrialized countries, if you have to comply, you will never invest in them. If you pay, if you brought a theory there, it makes it worthwhile to invest. So, again, doing this rather than taking your money away or just spending it all assumption. So, factually, these were better results. Theoretically, what we're talking about is, it doesn't make much sense either. My suggestion is that we have to, corruption is a much more articulate phenomenon. It's much more complicated. We have to look at what was this corruption and give you two ways to look at it. One is by comparing the red city story with the north fortune story. The other key is to compare first-degree corruption with second-degree corruption. And if you look at corruption by using one of these two keys, you see that corruption only is a much more complex story that only has a much more, much lighter, more of an implication. But if you also have quite different