What is corruption Flashcards
(13 cards)
Why should we care about corruption?
Extremely prevalent- survey research suggests that about 1 in 4 pay a bribe to a bureaucrat to access a public service. Most of that type of corruption is more likely to occur in global South countries or lower income countries, but that isn’t to say corruption only takes place in in the global South.
The European Commission calculated that their member states lost around 163 billion each year to corruption, which is only just less than what the total budget of the European Union total budget is.
How to define corruption?
The misuse of public office for private gain by politicians or bureaucrats. Can either do it for personal gain or for the benefit of a political party.
Fisman and Golden say we can judge corruption on 3 standards
1 A legal standard
2.Public opinion- do the majority find that act as corruption.
3.Hurts/goes against public interest.
They find it easier to think about corruption in terms legal or illegal. Across different countries, legislation is different so in some countries it might be corruption but not in another country. So if we start relying on public opinion or the interest of the public, it gets blurry.
Petty corruption is the everyday abuse of entrusted power by low & mid-level public officials in their interactions with ordinary citizens. So generally small payments between citizens & bureaucrats.
Grand corruption is at a much higher level of politics which distort policies or the central functioning of the state, enabling leaders to benefit at the expense of the public good. E.g. public procurement
How can we measure corruption?
One way is perception surveys. E.g. the Transparency International Corruption Perceptions Index ranks 180 countries in the world by their perceived level of public sector corruption according to experts and business people. Released annually. But this is all based essentially on people’s opinions/perceptions. Always the very cleanest countries are the Scandinavian countries and then the global South is perceived as more corrupt apart from Australia.
The other way is experiential surveys which is getting information from the experiences of actors who are operating in the country. One type of actor who we might get information from are business owners (domestic private companies that work within a country). E.g. The World Bank survey hundreds or thousands of executives from companies & only focused on firms that have at least 5 employees. These are going face to face , and ask the business owners/managers, have you had to pay a bribe/engage in corruption to get something for your company. Can use this to get at potentially mid-level corruption or grand corruption.
The other type of survey is global barometer surveys which are conducted on ordinary people and ask whether they have had to pay a bribe to access public services e.g. In Asia people were asked whether they think institutions are corrupt with almost ⅓ thinking the politicians who work on their behalf are corrupt. In Africa the police always come up as the most corrupt bureaucrats, then utility providers,
What countries are more likley to be corrupt?
Benson
Low GDP per capita
Low levels of human capital (years of schooling)
High regulation of the press
Why are developing countries more likley to be corrupt?
High levels of corruption means domestic & international firms are not willing to make big investments so we see low economic growth & that in consequence leads to low economic development. As for an economy to grow, we need investment (need companies to expand)
Another way is if you have low levels of economic development that results in low human capital which means the amount the gov can spend on public resources is going to be smaller which constraints how many can get secondary education. As a consequence have low institutional capacity because they don’t have the pool of qualified people to work in all of the ministries. Then because of low institutional capital, we’re gonna have high levels of corruption. Lack of a strong & independent judiciary as there are not enough qualified people which facilities high levels of corruption.
Do higher wages for bureaucrats reduce corruption?
The assumption is I will only take a bribe if the cost of it is higher than the chance that I will get caught & punished for taking that bribe and the alternative wage I can get.
Main takeaway of the model is the higher I pay the civil servant their incentive to take a bribe should be lower. It also depends on the chance that I take a bribe & get caught (audit intensity). If I know, 100% that I’m gonna get caught & lose my job, then I’m not gonna take a bribe.
However, empirical data doesn’t support this. There is evidence that as you increase wages, corruption can increase. E.g. a police officer gets paid £500 & bribes are usually like £2 & then the state says, we’re going to increase your wages to £800, those officers might feel empowered & emboldened. A study shows that police officers, once their salaries were increased by the state they started asking for higher value bribes.
What are top-down solutions to solve corruption?
Think about changing the institutional structure.
- Can empower an anti-corruption body to start investigating corruption & punishing those who engage in it.
- Provide more finance to the judiciary or try and increase the autonomy of the judicial branch as the overseer of both the legislature and the executive and bureaucrats
- Try and enhance either the number of auditors or the frequency/intensity of audits.
HOWEVER, there are problems
1. Govs don’t have an incentive to reduce corruption.
2. Need to ensure the actors in the anti-corruption bodies are themselves not going to engage in it. A lot of countries have an audit department, that oversees the finances of other departments but there’s many examples of these auditors being bribed so that they can cover up the financial malfeasance.
Although, Singapore and Hong Kong, did have success implementing top-down strategies to contain corruption where they strengthened the anti-corruption agency and they gave it widespread powers.
What are the bottom-up solutions to solve corruption?
Getting citizens involved
One study in Uganda realised that little of the central gov funds were reaching schools. The central gov released money to individual schools based on the number of children registered, so schools got different amounts. Found that only 24% of the total yearly transfer was ever reaching the school. So 75% was lost. So they began publishing monthly transfers that the central gov made in national newspapers.
What happened? Citizens, parents, teachers, PTA associations could then see how much their school was due to get & could monitor the flow of money from the central gov. It went down through district education offices & then to schools. So the leakage was happening at the district education offices. But now the citizens were empowered with information, they could act on that information & demand the district level bureaucrats stop stealing the money.
The problem is collective action problems. Citizens definitely all want the money to get to the school but the costs of participating have to outweigh. All have an individual incentive to free ride.
How can hiring a delegation solve corruption?
Could hire an international private firm to conduct some of your public sector operations.
Example is Mozambique who hired a foreign company called Crown Agents to manage their customs which is a notoriously corrupt area. This is an example where they gave the customs officers to be taken over by a private firm.
Problem- Not a long term solution. You really need to change the capacity of your public sector. Can’t just outsource private companies to manage your public sector.
Summarise how Olken monitored corruption
2007
Question- can corruption in gov sponsored projects be controlled by top down monitoring
Done on local gov development projects in Indonesia- building roads.
Does not measure corruption through perceptions/experience. Instead gets community level governments to say how they spent the money. He then paid engineers to look at the roads and took samples to see how deep the layers of the road were to try and then work out how much money was actually spent. This is a direct measure of corruption.
The villages are randomised into three conditions
1. Audits (top-down)
2. Community involvement where he sent invitations to 1 in every 2 households who received an invite to participate in these local monitoring meetings (bottom-up)
3. And in some of the bottom-up the community also got to place their comments about what was happening in a box
Summarise the results of Olken’s monitoring
Shows that the effect of the audit is to reduce missing expenditure by 8.5%
The takeaway of the paper is the bottom up solutions we don’t see significant effects, we just see small drops. The invites for community meetings and mobilise the community to do the monitoring we don’t find any statistically significant reduction in corruption in terms of missing expenditure.
It’s only when we have this promise that you will be top down audited by the central government that we do then see a reduction in missing expenditure.
The community monitoring did reduce corruption in labour but it didn’t reduce corruption in materials.
The comments forms, were only effective when they were distributed to people by schools rather than through village officials. Explains that as village officials picked who they would give those invites to & then try to control who was getting to monitor.
What is Bradley’s argument about what happened in Britain during the pandemic?
Argues Britain’s pandemic response was plagued by waste, negligence, and cronyism, particularly in the awarding of government contracts for personal protective equipment and other supplies.
Contend the gov in its rush to procure these items, sidestepped usual transparency rules, overlooked red flags, & favored companies with connections to the Conservative Party, leading to the squandering of public money & a system that was neither fair nor equitable.
What is Stone’s argument about what happened in Britain during the pandemic?
The gov procurement process during the pandemic, which favored friends and associates of Tory politicians, is widely perceived as corruption by the public.
Supports this argument by citing a survey indicating that 59% of voters believe the “high priority” lane for government contracts is corrupt.
