Corruption in Empirical Research

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Corruption in Empirical Research A ReviewDr. Johann Graf Lambsdorff, November 1999

Empirical research on corruption is quite a new undertaking. In anattempt to determine the causes and consequences of corruption,academics have concentrated lately on crosscountry analyses. These aremostly based on professional studies of the degree of corruption invarious countries. Such assessments are sometimes compiled by agenciesto determine country risks and the data gathered are sold to investors.Other sources, such as surveys, have been compiled in recent years andcontribute to crosscountry assessments of the extent of corruption. Thesedata have proved useful to the investigations described here in detail. The

data on corruption are to a large extent subjective assessments of the levelof corruption in various countries. As such perceptions are commonly agood indicator of the real level of corruption, the data permit variousregressions with other macroeconomic, political or social data,[Lambsdorff 1999].

The corruption indices applied were very often those byTransparency International (TI).

This review is organised into three sections. Section 2 will describe

the interaction between corruption and other indicators where aspects ofcausality are difficult to assess. Such difficulties can result whencorruption is simultaneously a cause and a consequence of other variables.This is likely to be the case with policy distortions, inequality and povertyas well as lack of economic freedom and absence of competition. Section3 presents studies which deal with the impact of corruption on investment,GDP, government expenditure and international flows of capital, goodsand aid. Research on the causes of corruption focus on political systems,public salaries as well as an examination of colonialism, gender and othercultural dimensions.

Government InvolvementGovernment involvement in private markets is commonly seen as a

source of corruption. It has been suggested that the overall size of thegovernment budget relative to GDP may therefore be positively correlated


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with levels of corruption. This is shown by LaPalombara [1994: 338] whoused a sample of countries in which Scandinavian countries were regardedas the exceptions. A better measure for a government's interference intoprivate markets may be depicted by its total redistributive activity. This

may be better captured by the total government transfers and subsidies.Simple conclusions with respect to government involvement and

corruption are hard to find. While some studies hint at decentralisation asa means to reduce corruption, the overall government budget cannotconvincingly be related to the level of corruption. But even the significantresult that decentralisation lowers corruption does not clearly suggestpolicy reform. One cannot exclude that certain cultural determinants driveboth variables. Countries characterized by civic cooperation and trust

among people as well as those with well developed sub-national unitsmay be in a position to decentralise and lower corruption at the same time.

Lack of CompetitionAdes and Di Tella [1995] test for the influence of two other

indicators of competition taken from the survey by IMD. A subjectiveindex of "market dominance" measures the extent to which dominance bya limited number of firms is detrimental to new business development.

Another index of "antitrust laws" measures the effectiveness of theselaws in checking noncompetitive practices. The authors conclude that theless competitive a market environment, the higher will be the amount ofcorruption by giving public servants the incentive to extract some of themonopoly rents through bribes. However, the authors are aware of theproblems of causality and acknowledge that corruption may provideincentives for politicians to support monopolies. In this case lack ofcompetition would result from corruption and not vice versa.

The Consequences of Corruption

Total Investment


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The first investigation on the impact of corruption on investment ina cross-section of countries was undertaken by Mauro [1995]. He makesuse of an older corruption index provided by Business International (BI),a private firm that sold this and related indicators of country risks to

banks, multinational companies, and other investors. The author finds thatin a sample of 67 countries, corruption negatively impacts on the ratio ofinvestment to GDP. He claims that if Bangladesh were to improve theintegrity of its bureaucracy to the level of that of Uruguay, its investmentrate would increase by almost five per cent of GDP.

Criticism of the results by Mauro has been voiced by Wedeman[1996]. He argues that while the correlation between corruption and theratio of investment to GDP might be strong for countries with little

corruption, it looses power for countries with higher levels of corruption.He therefore concludes that certain kinds of corruption might have moresignificance for investment decisions than the overall level of corruptionas such.

As corruption increases the risks associated with makinginvestments, e.g. by lowering the security of property rights, theorypredicts that corruption will have a clear negative impact on the ratio ofinvestment to GDP. But if corruption affects the productivity of capital, an

adverse impact on the ratio of investment to GDP will result.Another related contribution was made by Tanzi and Davoodi[1997], who examine the impact of corruption on the quality ofinvestments. The quality of investments plays an important role in theproductivity of capital and, hence, GDP. Referring to panel data oncorruption from PRS for 198095, the authors suggest that corruptionlowers the quality of the infrastructure as measured by the condition ofpaved roads and power outages. They support their hypothesis byreporting a high significance in their statistical results. However, based on

own regressions for a cross-section of countries using the TI index for1998 it was not possible to reproduce the significant results. This shedssome doubt on the robustness of the findings to different methodologies.

Government Expenditure


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Those who allocate resources may have better opportunities toextract illegal income from large investment projects than from smalllabour contracts. Public investments are particularly susceptible to thiskind of inefficient allocation and Mauro [1997a] suggests that corruption

may increase public investments. But the subsequent regressions provideno significant evidence. In contrast, there is more convincing evidencethat corruption affects government expenditure on education. Mauro[1998 and 1997a] finds that corruption lowers expenditure on education,arguing that other expenditures offer public servants better opportunitiesto collect bribes. His results hold for various specifications but may suffera little from the low explanatory power of the regressions.

The Causes of CorruptionSome of the studies cited in section 3 provide first insights into the

causes of corruption. It was shown that levels of corruption had an impacton flows of bilateral trade and donor assistance. This gave rise to theargument that the large exporting countries and donors in question exhibita different propensity to pay bribes and to accept illegitimate payments.This provides reason that levels of corruption are not only determineddomestically but that the responsibility must be shared with others,

particularly the larger global players. But, without doubt, there also exist avariety of domestic causes for corruption. These will be investigated next.

1 Public InstitutionsBy regressing various measures of corruption on indicators of press

freedom, Brunetti and Weder [1998b] show that a free press effectivelydeters corruption. The latter variables consist of "laws and regulations thatinfluence media content", "political influence over media content","economic influence over media content" and "repressive actions" as

compiled by Freedom House. These four separate indices and anaggregate index of press freedom all impact negatively on the level ofcorruption in various specifications.

2 Recruitment and Salaries


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The impact of merit-based recruitment on corruption in 35developing countries has been investigated by Evans and Rauch [1996].Higher values in the merit-based recruitment index are associated with agreater proportion of higherlevel officials in the core economic agencies

to be either in possession of a university degree or to enter the civilservice through a formal examination system. While controlling forincome, this index is negatively associated with corruption. To whatextent the level of public sector salaries is linked to the amount ofcorruption was examined by Rijckeghem and Weder [1997]. They arguethat low salaries force public servants to supplement their incomes illicitlywhile high salaries mean higher losses if a public servant gets caught. In asmall sample of 28 developing countries, they find a significant negative

influence on the level of corruption of civil service wages relative tomanufacturing wages.

3 Cultural DeterminantsThe authors determine the percentage of women in the labour force

and in parliament. Both indicators negatively impact on the level ofcorruption in a cross-section of up to 66 countries. The influence is largein magnitude, highly significant and robust throughout a large variety of

regressions, controlling for various variables. These findings are in linewith some micro-evidence reported by Swamy et al. and suggest thatpolicies designed to increase the role of women may help in lowering thelevel of corruption.

Tracing the level of corruption to cultural determinants should notsuggest that levels of corruption are largely inevitable. Culture can onlyexplain a certain fraction of the level of corruption and there remainssufficient room for improvements of a country's integrity. Moreover,cultural attitudes can also be a reflection of the organisational patterns that

led to their formation. The extent to which these organisational patternscan be the subject of policy reform reflects the further scope for anti-corruption initiatives. But a clear conclusion drawn by Husted [1999] isthat effective measures to fight corruption are dependent on culture.Countries with a large power distance or a strong desire for materialwealth will require different treatment than others.


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4 Further VariablesThere are still no full-fledged studies about the impact of

colonialism on the level of corruption. But variables of colonial heritage

sometimes enter as control variables when some studies investigate thecauses of corruption.

According to Treisman, former British colonies exhibit lower levelsof corruption than other countries, controlling for the level of income perhead and various other variables, for example the existence of a commonlaw legal system.

Conclusions

In a recent wave of empirical studies the causes and consequencesof corruption have been investigated. It can be concluded that corruptioncommonly goes along with policy distortions, inequality of income andlack of competition. But to derive clear arguments with respect tocausality is rather difficult. On the one hand, corruption may cause thesevariables but is at the same time likely to be the consequence of them. Onthe other hand, cultural determinants may drive corruption and thevariables in question at the same time. These empirical results are

nonetheless helpful in identifying areas which are prone to corruption orwhich indicate its existence.Empirical studies on the welfare effects are sometimes producing

inconsistent results, e.g. with respect to foreign direct investments.Similarly, the proven impact of corruption on investment is commonlyrelated to an adverse effect of corruption on incentives to invest. But thisis not without theoretical strings. But there is strong evidence thatcorruption lowers a country's attractiveness for making investments. Thisreduces capital accumulation and lowers capital inflows. Also the

productivity of capital suffers from corruption. This corroborates thatlarge welfare losses result from corruption.

With respect to the causes of corruption not all results wereconsistent. For example the role of wages is ambiguous. Also the impactof democracy and colonialism on corruption was not very clear and maydeserve further scrutiny. Press freedom and the independence of the


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judiciary appeared to be important elements in reducing corruption. Also,an increased role of women in society turned out to strongly reduce thelevel of corruption. Abundance of natural resources increased the level ofcorruption. Further cultural dimensions were determined to be important.

In particular, a mentality of accepting hierarchies was found to increasecorruption.

While domestic causes of corruption have been identified, the roleof the international community deserves equal recognition. In globalisedmarkets corruption often takes place in crossborder activities. This ideawas investigated in various studies, suggesting that some exporters anddonors tend to favour countries perceived to be corrupt. This suggests thatsome global players contribute to high levels of corruption more than

others.

Corupia n cercetare empiric - o opinieDr. Johann Graf Lambsdorff, noiembrie 1999

Cercetare empiric asupra corupiei este destul de o ntreprinderenou. ntr-o ncercare de a determina cauzele i consecinele corupiei,cadre didactice s-au concentrat in ultima vreme la cross-country analize.

Acestea se bazeaz n principal pe studii profesionale gradul de corupien diferite ri. Aceste evaluri sunt, uneori, compilate de ctre ageniipentru a determina riscurile de ar si a datelor colectate sunt vnduteinvestitorilor. Alte surse, cum ar fi anchete, au fost elaborate n ultimii anii de a contribui la cross-country evaluri gradul corupie. Aceste date s-au dovedit a fi utile pentru investigaiile descrise aici n detaliu. Dateleprivind corupia sunt, n mare msur evalurile subiective ale niveluluicorupie n diferite ri. Ca astfel de percepii sunt de obicei un bunindicator nivelului real al corupiei, a datelor permit regresii diferite, cu

alte date macroeconomice, politice sau sociale, [Lambsdorff 1999].Indiciile corupiei au fost aplicate foarte adesea de cei de la

Transparency International (TI).Aceast revizuire este organizat n trei seciuni. Seciunea 2 va

descrie interaciunea dintre corupie i a altor indicatori n cazul n careaspectele legate de cauzalitate sunt dificil de evaluat. Aceste dificulti pot


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rezulta atunci cnd corupia n acelai timp o cauz i o consecin a altorvariabile. Acest lucru este probabil s fie cazul cu distorsiuni de politic,inegalitii i srciei, precum i lipsa libertate economic si lipsaconcuren. Seciunea 3 prezint studiile care se ocup cu impactul

corupiei asupra investiiilor, PIB, cheltuielile publice si fluxurileinternaionale de capital, bunuri si de ajutor. Cercetarea cu privire lacauzele corupie concentreaz asupra sistemelor politice, a salariilorpublice, precum i o examinare a colonialismului, de gen i altedimensiuni culturale.

Implicarea GuvernuluiImplicarea guvernului n pie ele private este de obicei

v zut ca o surs de corup ie. Acesta a fost sugerat faptul c dimensiunea global a bugetului de stat n raport cu PIB-ul poate fi, prin urmare, pozitiv corelate cu nivelul decorup ie. Acest lucru este demonstrat de LaPalombara [1994: 338], care a folosit un eantion de ri n care rile scandinave au fost considerate ca excep ii. O m sur bun pentru interven ia unui guvern de pe pie ele private pot fi descrise prin activitatea sa de redistribuire total . Acest

lucru poate fi mai bine capturat de transferurileguvernamentale totale i subven ii.Concluzii simple cu privire la implicarea Guvernului i acorup iei sunt greu de g sit. n timp ce unele studii aluzie la descentralizarea ca un mijloc de a reduce corup ia, bugetul de stat general nu poate fi conving tor n leg tur cu nivelul de corup ie. Dar chiar i rezultat semnificativ c descentralizarea reduce corup ia nu se sugereaz n mod clar de reform politic . Nu se poate exclude faptul c factorii determinan i anumite culturale conduce ambele variabile. ri caracterizate prin cooperare civic i de ncredere ntre oameni, precum i cele cu bine dezvoltatesub-na ionale, unit ile pot fi n pozi ia de a descentraliza i corup ia mic , n acelai timp.


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Lipsa de ConcurenAdes i Di Tella [1995] test pentru influen a a doi

indicatori ai concuren ei luate din studiu realizat de IMD.

Un index subiectiv de "pozi ie dominant pe pia ", evalueaz m sura n care pozi ia dominant de c tre un num r limitat de firme este n detrimentul dezvolt rii de noi afaceri. Un alt indice de "anti-trust legi", m soar eficacitatea acestor legi n verificarea non-competitivepractici. Autorii au concluzionat ca mai pu in competitive unui mediu de pia , mai mare va fi cantitatea de corup ie de c tre func ionarii publici oferindu-stimulent pentru a

extrage o parte din chiriile de monopol prin mit . Cu toate acestea, autorii sunt contien i de problemele de cauzalitate i recunosc c corup ia poate s furnizeze stimulente pentru politicieni pentru a sprijini monopoluri.n acest caz, lipsa de concuren ar putea rezulta din corup ie i nu invers.

Consecinele corupieiInvestiii totale

Prima ancheta asupra impactului corupiei a investiiilor ntr-oseciune transversal a rilor a fost realizat de Mauro [1995]. El face uzde un indice de corupie mai vechi furnizate de Afaceri International (BI),o firm privat care a vndut indicatori de acest lucru i legate de riscurilede ar la bnci, companii multinaionale, precum i aliinvestitori.Autorul constat c ntr-un eantion de 67 de ri, corupia areun impact negativ asupra raportului de investiii n PIB. El susine c,dac ar Bangladesh pentru a mbunti integritatea birocraiei sale la

nivelul de care a Uruguayului, rata sa de investiii ar crete cu aproapecinci la suta din PIB.

Critica a rezultatelor de Mauro a fost exprimat de ctre Wedeman[1996]. El susine c n timp ce corelaia ntre corupie i raportul deinvestiii n PIB ar putea fi puternic pentru rile cu corupia mic, ea ipierde puterea ri cu niveluri mai ridicate de corupie. El concluzioneaz


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c, prin urmare, anumite tipuri de corupie ar putea avea o importan maimare pentru deciziile de investiii dect nivelul general al corupiei caatare.

Ca corupiei crete riscurile asociate cu investiiile pe care le fac, de

exemplu, prin scderea securitii drepturilor de proprietate, teoria prezicec corupia va avea un impact negativ clar asupra raportului de investiiin PIB. Dar dac corupia afecteaz productivitatea capitalului, un impactnegativ asupra raportului de investiii n PIB se va rezulta.

O alt contribuie aferent a fost fcut de Tanzi i Davoodi [1997],care analizeaz impactului corupiei asupra calitii investiiilor.Calitateade investiii joac un rol important n productivitatea capitalului i, prinurmare, PIB-ul. Referindu-se la panoul de datele privind corupia de la

PRS 1980-1995, autorii sugereaz c corupia scade calitateainfrastructurii, msurat prin starea de drumuri pavate i de ntreruperi deenergie. Acestea susin ipoteza lor de a raporta o importan mare nrezultatele lor statistice. Cu toate acestea, pe baza regresii proprii pentru oseciune transversal a rilor care utilizeaz indicele TI 1998, nu a fostposibil s se reproduc rezultate semnificative. Aceasta arunc unelendoieli cu privire la soliditatea a constatrilor de metodologii diferite.

Cheltuielilor guvernamentaleCei care aloca resurse poate avea oportuniti mai bune de a extragevenituri ilegale din proiecte mari de investiii dect de la contracte demunc mici. Investiiile publice sunt deosebit de sensibile la acest tip dealocarea ineficient i Mauro [1997a], sugereaz c fenomenul corupieipoate crete investiiile publice. Dar regresii ulterioare de a nu furniza nicio dovad semnificativ. n schimb, exist mai multe dovezi convingtoarec fenomenul corupiei afecteaz cheltuielilor publice pentru educaie.Mauro [1998 i 1997a], consider c fenomenul corupiei reduce

cheltuielile pentru educaie, susinnd c alte cheltuieli oferfuncionarilor publici oportuniti mai bune pentru a colecta mit.Rezultatele sale inei apsat pentru caietul de sarcini diferite, dar poatesuferi un pic de putere explicativ sczut a regresii.


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Cauzele corupieiUnele dintre studiile menionate n seciunea 3 ofer prima

perspective a cauzelor de corupie. A fost demonstrat c nivelul decorupie au avut un impact asupra fluxurilor comerciale bilaterale i

asistena donatorilor. Acest lucru a dat natere la argumentul c rile mariexportatoare i donatorii n cauz prezint o tendin diferit de a pltimit i de a accepta pli ilegale. Aceasta prevede motiv c nivelul decorupie nu sunt determinate numai pe plan intern, dar c responsabilitateatrebuie s fie mprtite cu ceilali, n special cele mai mari juctori lanivel mondial. Dar, fr ndoial, exist, de asemenea, o varietate decauzelor interne pentru corupie. Acestea vor fi investigate.

1 Instituii publicePrin regres diferite msuri de corupie privind indicatorii delibertatea presei, Brunetti i Weder [1998b], arat c o pres liberdescurajeaz n mod eficient corupia. Variabilele din urm constau din"legile i reglementrile care influeneaz coninutul mass-media","influena politic asupra mass-media de coninut", "influena economicasupra coninutului mass-media" i "aciuni represive", aa cum compilatede ctre Freedom House. Aceste patru indici separat i un indice agregatal libertii presei au toate un impact negativ asupra nivelului de corupie

n caietul de sarcini diferite.

2 Recrutare i salariileImpactul a recrutrii bazate pe merit cu privire la corupie n 35 de

ri n curs de dezvoltare a fost investigat de ctre Evans i Rauch [1996].Valori mai mari n indicele de recrutare bazate pe merit, sunt asociate cu oproporie mai mare de oficiali de rang superior n cadrul ageniilor de bazeconomice pentru a fi n posesia unei diplome universitare sau pentru a

intra n serviciul public prin intermediul unui sistem de examinareformal. n timp ce controlul venit, acest indice este negativ asociat cucorupia. n ce msur nivelul salariilor din sectorul public este legat decantitatea de corupie a fost examinat de Rijckeghem i Weder [1997]. Eisusin c salariile mici obliga funcionarii publici pentru a suplimentaveniturile lor ilicit n timp ce salariile mari nseamn pierderi mai mari n


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cazul n care un funcionar public este prins. ntr-un mic eantion de 28 deri n curs de dezvoltare, care vor gsi o influen negativ semnificativasupra nivelului de corupie a salariilor funcionarilor publici n raport cusalariile de fabricaie.

3 Factorii determinani culturaleAutorii determina procentul de femei n fora de munc i n

parlament. Ambii indicatori au un impact negativ asupra niveluluicorupiei ntr-o seciune transversal de pn la 66 de ri.Influena estemare n mrime, extrem de semnificativ i robust a lungul o marevarietate de regresii, control variabile diferite. Aceste constatri sunt nconformitate cu unele dovezi micro-raportate de Swamy et al. i

sugereaz c politicile menite s creasc rolul femeilor poate ajuta lascaderea nivelului de corupie.Urmrirea nivelului de corupie la determinani culturale nu ar trebui

s sugereze faptul c nivelul de corupie sunt n mare parte inevitabil.Cultura poate explica doar o fraciune anumit nivel al corupiei i rmnespaiu suficient mbuntiri ale integritii rii. Mai mult, atitudinileculturale pot fi, de asemenea, o reflectare a modelelor de organizare careau dus la formarea lor.Msura n care aceste modele de organizare poate fi

obiectul a reformei politicii reflect domeniul de aplicare n continuarepentru anti-corupie iniiative. Dar o concluzie clar ntocmit de ctreHusted [1999], este c msurile eficiente de combatere a corupiei suntdependente de cultura. rile cu o distan de mare putere sau de o dorintaputernica pentru bogie material va necesita un tratament diferit dectaltele.

4 variabile suplimentarenc nu exist studii cu drepturi depline cu privire la impactul

colonialismului asupra nivelului de corupie. Dar variabilele depatrimoniu coloniale intra, uneori, ca variabile de control atunci cndunele studii investiga cauzele de corupie.

Potrivit Treisman, fostele colonii britanice prezinta niveluri maisczute de corupie dect alte ri, pentru controlul nivelului de venit pe


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cap de locuitor i de diverse alte variabile, pentru exemplu, existena unuisistem juridic de drept comun.

Concluziie

Intr-un val recent de studii empirice cauzele i consecinele corupieiau fost investigate. Se poate concluziona c corupia de obicei mergeimpreuna cu distorsiuni de politic, inegalitatea veniturilor i lipsa deconcuren. Dar pentru a obine argumente clare cu privire la cauzalitateaeste destul de dificil. Pe de o parte, corupia poate provoca acestevariabile, dar este n acelai timp, ar putea fi consecinta a ei. Pe de altparte, factorii determinani culturale pot conduce corupiei i variabilele n

cauz, n acelai timp. Aceste rezultate empirice sunt, totui, de ajutor nidentificarea zonelor care sunt predispuse la corupie sau care indicexistena.

Studii empirice cu privire la efectele sociale se produc, uneori,rezultate inconsistente, de exemplu, cu privire la investiiile strinedirecte. n mod similar, impactul dovedit a corupiei asupra investiiiloreste de obicei legat de un efect advers al corupiei asupra stimulentepentru a investi. Dar aceasta nu este fr corzi teoretice. Dar exist dovezi

puternice c fenomenul corupiei scade atractivitatea unei ri pentrurealizarea de investitii. Acest lucru reduce acumularea de capital i reduceintrrile de capital. De asemenea, productivitatea capitalului sufer decorupie. Acest lucru confirm faptul c bunstarea mare rezult pierderidin corupie.

n ceea ce privete cauzele de corupie, nu toate rezultatele au fostconsecvente. De exemplu, rolul de a salariilor este ambigu. Deasemenea, impactul a democraiei i a colonialismului asupra corupiei nua fost foarte clar si poate merita mai mult control. Libertatea presei i

independena justiiei pare a fi elemente importante n reducerea corupiei.De asemenea, un rol mai mare a femeilor n societate s-au dovedit areduce puternic nivelul de corupie. Abundena de resurse naturale acrescut nivelul de corupie. Noi dimensiuni culturale au fost determinates fie importante. n special, o mentalitate de ierarhii care accept au fostgasiti pentru a creste corupia.


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n timp ce cauzele interne ale corupiei au fost identificate, rolulcomunitii internaionale merit o recunoatere egal. Pe pieeleglobalizate corupia are loc adesea n activiti transfrontaliere. Aceastidee a fost investigat n studii diferite, ceea ce sugereaz c unii

exportatori i donatori tind s favorizeze rile percepute ca fiind corupte.Acest lucru sugereaz faptul c unii juctori globale contribuie la niveluriridicate de corupie mai mult dect altele.

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Corruption in Empirical Research