The waves of economic liberalisation starting in the 1980s, the ‘third wave’ of democratisation in the post-Cold war 1990s and the ‘good governance’ agenda which emerged among the major development agencies have brought renewed hopes for an effective, root-and-branch cure for corruption. The spread of neo-liberal economies and liberal democratic politics has brought to the fore certain basic assumptions and theses about the causes and cure of corruption. On the economic side, it has been seen as a consequences of excessive state intervention and bureaucratic rents created thereby; on the political side, it has been seen as consequence of the unaccountable monopoly power of various kinds of authoritarian or totalitarian regimes. The policy implications of these analyses are that corruption can be reduced by rolling back the state through privatisation and deregulation and by introducing more competition, transparency and accountability into the political process through a transition to a liberal democratic regime. These broad arguments seem plausible in broad theoretical terms, but how accurate are they in reality? Counter evidence raises a host of questions about the precise nature of relationships between corruption in its various forms on the one side and economic liberalisation and political democratisation on the other. In the following sections we will analyse all these questions in detail.