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sanchez pages > corruption > Flashcards

corruption Flashcards

1
Q

corruption

A

the misuse of public services for private gain

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2
Q

what is corruption broadly?

A

mismanagement of the state
OR
dysfunction of institutions governing interrelationships between state and citizens

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3
Q

president mobutu sese seko (congo)

A

looted $5 billion

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4
Q

angolan corruption

A

$1 billion of oil revenues lost in 2001

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5
Q

world bank institute

A

total bribes in a year to be about $1 trillion (3% of world GDP)

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6
Q

purposes of bribes (5)

A
  1. clear a market
  2. incentive bonus
  3. reduce costs
  4. allow criminal activity
  5. create excessive regulations
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7
Q

bribes that clear a market

A

allocation of scarce resources

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8
Q

bribes as incentive bonus

A

creating red tape to generate extra revenue

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9
Q

bribes that reduce costs

A

escaping excessive regulations (safety, environmental, etc.)

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10
Q

bribes to allow criminal activity

A

criminal groups extend their reach to legal business & politics

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11
Q

bribes create excessive regulations

A

public officials have incentives to create distortions

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12
Q

types of measures of corruption (3)

A
  1. indicators created by private sector risk assessment firms
  2. cardinal measures
  3. averages of ratings created by perceptions of corruption by a number of sources
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13
Q

indicators of corruption created by private sector risk assessment firms

A

international country risk guide (ICR) measures the probability that a bribe will be demanded + the extent to which bribes are demanded at different layers of gov

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14
Q

cardinal measures

A

international crime victim surveys (ICVS) asks about bribes paid by urban households

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15
Q

averages of ratings

A
  • Transparency International and Corruption Perception Index
  • Kaufmann, Kraay and Mastruzzi (2003) have a Control of Corruption measure
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16
Q

effects of corruption

A
  • less growth
  • less investment
  • undermined public finances
  • limits provision of public services
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17
Q

explain the link between corruption to lower growth

A

incentives it creates to invest in rent seeking activities rather than productive investment

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18
Q

explain the link between corruption to lower investment

A

uncertainty reduces the incentive to invest

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19
Q

survey of firms in uganda (1995-97)

A

firm growth was reduced both by taxation and bribes

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20
Q

Fisman’s work with Indonesia firms

A

firms that are politically connected specialized in corruption and rent seeking; leader’s health shocks could lead to political instability and a general drop in stock prices

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21
Q

Khwaja and Mian (2004) in Pakistan

A

politicians join firms or start new ones to use public resources

22
Q

common characteristics of countries with high corruption (4)

A
  1. developing countries/transition countries
  2. historical experience of socialist governments
  3. low-income levels (bribing replaced by lobbying as countries develop)
  4. closed economies
23
Q

institutional theories for corruption

A
  1. economic factors (income levels, human capital)
  2. direct role of weak institutions
  3. historical traditions (influence of religion)
24
Q

economic policy impact on corruption

A

restricted competition in the marketplace which creates incentives for bribing
examples: lack of open trade, excessive regulations, lack of press

25
Q

electoral rules impact on corruption

A

type of electoral assortment affect the level of corruption

26
Q

what are the most robust determinants of corruption? (3)

A
  1. human capital
  2. per capita income
  3. freedom of the press
27
Q

study by Reinikka and Svensson (2004) on public education programs in Uganda

A

schools only received about 13% of the funds

28
Q

Olken (2004, 2007) in Indonesia

A

29% of the funds for a road building project & 18% of subsidized rice in anti poverty program was stolen

29
Q

Hseih and Moretti (way to measure corruption)

A

how much underpricing of oil there was in Iraq to get kickbacks from oil buyers? (2%)

30
Q

Di Tella and Schargrodsky (way to measure corruption)

A

how much do prices fall when an anti-corruption drive in public procurement in hospitals was introduced in Buenos Aires? (15%)

31
Q

explain Di Tella & Schargrodsky (2003) experiment in Buenos Aires

A

announced a new strategy for controlling corruption in input purchases in public hospitals (were previously decentralized w/ no incentive to save money)

reform: procurement officers forced to report on price, quantity, brand, and supplier of each purchase

32
Q

what are the demand & supply sides of corruption?

A

demand: conditioned by firms’ ability to bribe
supply: bribes as bonuses

33
Q

why do higher wages not necessarily reduce corruption? (2)

A
  1. if officer and briber bargain over the bribe, then the bribe increases with the wage of the officers
  2. just total bribe revenue might increase
34
Q

cultures of corruption

A
  • if everyone else is taking bribes, lower odds of getting caught
  • active pressure to be corrupt –> more corrupt types might select into the agency
35
Q

Rauch and Evans (2000) & Treisman (2000)

A

no systematic evidence that higher wages deter corruption

36
Q

Van Rijckhegem and Weder (2001)

A

evidence that higher wages deter corruption

37
Q

Ades and di Tella (1999)

A

if there is a lot of competition, ability of bureaucrats to extract bribes is lower

38
Q

Bliss and di Tella (1997)

A

corruption can foster firms exiting, leading to less competitive market

39
Q

(De Soto 1989, Shleifer and Vishny 1993)

A

regulatory regime is a response to being able to extract rents

40
Q

Rose Ackerman (1978)

A

layered processes expand opportunities for bribery at each level, even though increased competition between bureaucrats can decrease corruption

41
Q

what are two ways that competition can affect corruption?

A
  1. accountability of incumbents
  2. electoral politics between parties at the time of election
42
Q

Bardhan and Yang (2005) argument about political competition

A

may lead to competitive populism

43
Q

competitive populism

A

use of money-power to seek short term political advantage at the expense of decisive political actions benefiting the long term

44
Q

Banerjee and Pande (2007)

A

(if quality = how corrupt) as competition increases, less likely that more corrupt politician wins

45
Q

explain ethnic politics of uttar pradesh (3)

A
  1. 80% majority Hindu
  2. large coalition of lower caste group emerged recently (1984, then 1992)
  3. over 70% of voters vote based on their caste identity
46
Q

results of ethnic politics of uttar pradesh (3)

A
  1. jurisdictions with large ethnic bias had larger increases in corrupt winning candidates
  2. jurisdictions with low bias did not
  3. non-majority candidates had to prove themselves much harder in jurisdictions with high bias
47
Q

why is fighting corruption difficult?

A

putting more money into enforcement institutions makes them turn corrupt

48
Q

Hong Kong solution to corruption (4)

A
  1. changed laws to make a corrupt officer guilty until proved innocent
  2. created independent bodies to investigate corruption
  3. wages of public officials increased
  4. public officials rotated so that they would not develop long term relationships with “clients”
49
Q

drawback of top-down monitoring

A

assumes that the law enforcers are not corruptible

50
Q

grassroot monitoring (Olken, 2007)

A
  • field experiment in 608 Indonesian villages about to start public projects
  • randomly selected villages were told that the project would be audited by an external agency
  • other villages where selected to hold “accountability meetings” in which project officials would report how they spent the project funds

sanchez pages (15 decks)

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