India is electing more and more politicians that are, or have been, accused of criminal activity. This column asks whether accused – and potentially corrupt – politicians influence economic activity by focusing on data from road construction, which is often tied to corruption. The evidence tentatively suggests that caste-based and patronage politics favours lower quality politicians, who in turn deliver benefits to specific groups. This generally leads to lower aggregate growth.
Nishith Prakash, Marc Rockmore, Yogesh Uppal, 17 December 2015
Toke S. Aidt, Zareh Asatryan, Lusine Samvel Badalyan, Friedrich Heinemann, 28 November 2015
Central bank independence was supposed to end politically driven monetary policy. This column discusses new evidence showing a sizeable spike in the growth rate of cash and overnight bank deposits centred on election days. The spike is present in countries with weak political institutions, but not in OECD countries. The cycle seems to be related to the cash demand created by systemic vote buying.
Christos Koulovatianos, John Tsoukalas, 20 July 2015
As numerous Greek MEPs opposed the Eurozone summit deal, implementation will require a broad coalition of political parties. This column argues that corruption in Greek politics will prevent the formation of such a coalition. The heavy debt service leads parties to invent extreme ways of responding to super-austerity and to strongly oppose direct reforms that challenge existing clientelism. The way out is to sign a new agreement that combines debt restructuring and radical transparency reforms, including naming-and-shaming practices, to block clientelism in the medium and long run.
Jan Hanousek, Anna Kochanova, 04 May 2015
The evidence about the effect of bribery on economic growth is mixed. Some find it harmful while others believe it helps via a ‘grease the wheels’ effect. This column argues that the ambiguity can be explained by divergent effects of the mean and dispersion of corruption. A high bribery-mean retards productivity growth of firms, but a high bribery-dispersion facilitates performance of weak firms.
Nauro F. Campos, 13 June 2014
The 2014 FIFA World Cup is upon us. This column argues that there will be plenty of partying, but also plenty of protests fuelled by the gross mismanagement and limited economic benefits from hosting the Cup. Stadia may be ready, but much planned infrastructure has already been abandoned. Indeed, rent-seeking may be one reason nations bid for the Cup. Since the returns to transportation infrastructure are higher in poor countries, the international community should work to stamp out corruption so that poor countries can continue to host mega-events like the World Cup.
Jie Bai, Seema Jayachandran, Edmund J. Malesky, Benjamin Olken , 22 November 2013
Eliminating corruption is a central policy goal of policymakers around the globe. It is known that corruption is a barrier to economic development because it increases the costs and risk of business activity, and deters investment. This column discusses a new study analysing the opposite causal relationship – the effect of economic growth on corruption. Both theoretical and empirical evidence show that economic growth causes the amount of corruption to fall.
Thorvaldur Gylfason, 17 November 2013
Based on statistical measures of different degrees of democracy vs. autocracy, this article briefly reviews the progress of democracy around the world during the past 212 years, and places democratic developments in Africa since 1960 in that context. Democracy is positively associated with education, which in turn is associated with lower fertility and greater longevity. Democracy is also associated with reduced corruption. Together, these effects suggest democracy should be good for growth – a hypothesis that is borne out by the data.
Jakob de Haan, Erik Dietzenbacher, Văn Hà Le, 16 June 2013
Do higher government wages reduce corruption? This column argues that they do, but only in relatively poor countries. When a country’s poor, higher government wages reduce bureaucrats’ incentive to extract illegal incomes. However, as income per capita rises, higher government wages gradually lose their effectiveness in combating corruption.
Svetlana Ledyaeva, Päivi Karhunen, John Whalley, 17 June 2013
Russian involvement in Cyprus was widely recognised during the acute phase of the most recent EZ crisis. This column argues that some of this is driven by corruption-linked money laundering. Using official Russian statistics, the authors estimate a standard model of FDI location to identify usual patterns related to nations with lax anti-money laundering measures such as Cyprus and the British Virgin Islands. Funds from such nations were biased towards locating investments in the most corrupt Russian regions compared to a group of genuine foreign investors.
Patrick A Messerlin, Sébastien Miroudot, 07 September 2012
Public spending on large-scale projects is often a way of sneaking in protectionism through the back door and there are many cases of outright corruption. With the EU and US pushing hard for more open public procurement elsewhere in the world, this column asks just how open these markets are, particularly in the EU, which claims to have the most open market in the world.
Massimo Tavoni, Caterina Gennaioli, 12 July 2012
Despite best intentions, government policies can sometimes provide politicians and others with an incentive to break the law. This column analyses the link between state support for renewable energy and corruption. It provides some evidence of this connection for the case of the tradable green certificate system, a policy introduced in Italy in 1999 to promote wind power.
Ana De La O, Alberto Chong, Dean Karlan, Léonard Wantchékon, 23 January 2012
For democratic theorists, the notion that greater transparency improves accountability is axiomatic: when voters find out about political corruption, they punish the offending politicians by not voting for them again. But, the authors of CEPR DP8790 argue, many voters also respond to evidence of corruption by not voting at all – indicating that more transparency might not automatically result in a healthier democratic process.
Benjamin Olken , Rohini Pande, 21 January 2012
Recent innovations in methodology have sparked a remarkable expansion in economists’ ability to measure corruption. This column reviews these new techniques, which range from inferring corrupt links from stock prices to attempting to observe bribes undercover. It concludes that, while corruption is prevalent in poor countries, there remains little consensus about its magnitude or the best way to fight it.
Deniz Igan, Prachi Mishra, 11 August 2011
Did anti-regulation lobbying fuel the subprime crisis? This column shows that there is a strong relationship between financial industry lobbying and favourable financial regulation legislation. It argues that the financial industry fought, and defeated, measures that might have curbed some of the reckless lending practices that many think played a pivotal role in igniting the crisis.
Jim Brumby, Era Dabla-Norris, Annette Kyobe, Zac Mills, Chris Papageorgiou, 03 July 2011
In the debate over the pros and cons of government spending, the efficacy of public investment is a point on which many conclusions hinge. This column introduces a new Public Investment Management Index that benchmarks the quality and efficiency of the investment process across 71 developing and emerging countries.
Antonio Cabrales, Esther Hauk, 17 June 2011
The natural-resource curse is now a staple in the development economist’s diet. Natural resources have tended to lead to lower economic growth, except in democratic countries or those with robust institutions. This column presents a political economy model to explain this phenomenon, focusing on the threat of revolutions.
Sascha O. Becker, Ludger Woessmann, 31 May 2011
For centuries, Europe was ruled by empires wielding global influence. This column shows that these empires can leave behind a long-lasting legacy through cultural norms. Comparing individuals on opposite sides of the long-gone Habsburg Empire border within five countries, it shows that firms and people living in what used to be the empire have higher trust in courts and police.
Nicolas Depetris Chauvin, Marcelo Olarreaga, Guido Porto, 11 March 2011
Cash crops provide the livelihoods for millions of people in sub-Saharan Africa. This CEPR/World Bank book explores the effects of increasing competition in these markets. It finds that while competition improves welfare for farmers on the whole, policymakers should still consider the potential winners and losers in each case.
Nicolas Depetris Chauvin, Guido Porto, 11 March 2011
Millions of people in sub-Saharan Africa rely on cash crops for their livelihoods . This column presents a new CEPR/World Bank book exploring the effects of increasing competition in these markets. It finds that while competition improves welfare for farmers on the whole, policymakers should still consider the potential winners and losers in each case.
Nauro F. Campos, Ralitza Dimova, 24 December 2010
Does corruption sand or grease the wheels of economic growth? This column reviews recent research that uses meta-analysis techniques to try to provide more concrete answers to this old-age question. From a unique, comprehensive data base of 460 estimates of the impact of corruption on growth from 41 studies, the main conclusion that emerges is that there is little support for the “greasing the wheels” hypothesis.