Editing Political corruption (section)

===Size of public sector===
Extensive and diverse public spending is, in itself, inherently at risk of cronyism, kickbacks, and embezzlement. Complicated regulations and arbitrary, unsupervised official conduct exacerbate the problem. This is one argument for [[privatization]] and [[deregulation]]. Opponents of privatization see the argument as ideological. The argument that corruption necessarily follows from the opportunity is weakened by the existence of countries with low to non-existent corruption but large public sectors, like the [[Nordic countries]].<ref>{{cite web|url=http://www.project-syndicate.org/commentary/sachs110 |title=Lessons From the North|publisher=Project Syndicate |date= 2006-04-21|access-date=2009-11-05}}</ref> These countries score high on the [[Ease of Doing Business Index]], due to good and often simple regulations and have [[rule of law]] firmly established. Therefore, due to their lack of corruption in the first place, they can run large public sectors without inducing political corruption. Recent evidence that takes both the size of expenditures and regulatory complexity into account has found that high-income democracies with more expansive state sectors do indeed have higher levels of corruption.<ref name="www-wds.worldbank" />

Like other governmental economic activities, privatization, such as in the sale of government-owned property, is particularly at the risk of cronyism. Privatizations in Russia, Latin America, and East Germany were accompanied by large-scale corruption during the sale of the state-owned companies. Those with political connections unfairly gained large wealth, which has discredited privatization in these regions. While media have reported widely the grand corruption that accompanied the sales, studies have argued that in addition to increased operating efficiency, daily petty corruption is, or would be, larger without privatization and that corruption is more prevalent in non-privatized sectors. Furthermore, there is evidence to suggest that extralegal and unofficial activities are more prevalent in countries that privatized less.<ref>Privatization in Competitive Sectors: The Record to Date. Sunita Kikeri and John Nellis. World Bank Policy Research Working Paper 2860, June 2002. [http://www.econ.chula.ac.th/about/member/sothitorn/privatization.pdf Econ.Chula.ac.th artimort.pdf IDEI.fr] {{webarchive |url=https://web.archive.org/web/20090325112620/http://www.econ.chula.ac.th/about/member/sothitorn/privatization.pdf |date=March 25, 2009 }}</ref> In the European Union, the principle of subsidiarity is applied: a government service should be provided by the lowest, most local authority that can competently provide it. An effect is that distribution of funds in multiple instances discourages embezzlement because even small sums missing will be noticed. In contrast, in a centralized authority, even minute proportions of public funds can be large sums of money.