Taming corruption: Rent potential, collective action, and taxability in Morocco

Why do autocratic regimes contain bureaucratic corruption in some economic sectors but allow it in other areas? This paper examines variations in governance outcomes and perceptions across firms in Morocco based on a survey of 659 businesses. Three factors explain better public services and control of corruption: the magnitude of potential rents that firms can exchange with the administration, the collective action capacity of the sector vis-à-vis the executive, and the taxability of the industry. Firms in sectors with low rent potential are more likely to coordinate, claim, and obtain better governance in exchange for taxes, whereas high-rent companies find it difficult to sustain effective progovernance collective action. The findings shed light on business-state relations in autocratic political regimes that have to balance revenue raising goals, policy commitments to selected sectors, and incentives for grand corruption.