A Cross-Country Comparison of Corruption and Public Expenditures: A Panel Data Approach

Corruption is an especially serious problem for all countries, and has damaging effects on sustainable economic growth. Although there is a significant relationship between corruption and public expenditures, the degree and way of this relationship is changed according to countries. The main objective of this article is to analyze the relationship between corruption and the level and composition of public expenditures, using data from 21 countries which are classified as countries in above and below average corruption perception indices. In empirical analysis, panel data were used in modeling of the effects of corruption on public expenditures. The empirical results show the findings support the hypothesis that the composition of public expenditures has an important element on corruption for countries.     

Money matters: The role of public sector wages in corruption prevention

Economic theory as well as conventional wisdom from corruption-ridden countries suggest that low wages among public employees lead to corruption, but cross-sectional empirical research has largely failed to confirm this relationship. In this article, we investigate the relationship between experiences of corruption and wage levels for public sector employees, utilizing both objective and expert survey data, with global coverage. The statistical analysis shows that higher wages, as compared to the average wage in the country, is associated with less corruption. There is also some support, but weaker, for the hypothesis that corruption increases when wages fall below subsistence levels.     

LEARNING FROM SUCCESS: ARE SUCCESSFUL GOVERNMENTS ROLE MODELS?

Do local governments learn from their successful peers when designing public policies? In spite of extensive research on policy diffusion and learning, there is still a lack of studies on how success relates to learning patterns. We address this deficiency by examining which other governments local administrative units draw lessons from. More precisely, we investigate whether public managers learn from the experiences of local governments whose citizens are satisfied with government services. Using a large dyadic dataset on all Swedish municipalities from 2010, we find that senior public managers in local administrations learn from similar local governments and from neighbours. But we also find clear evidence that they learn from local governments whose citizens are pleased with local public services. This indicates that best practices are spread among local governments.     

The effect of fiscal transparency on corruption: A panel cross-country analysis

Both academicians and practitioners have advocated for increased fiscal transparency in government as a means of promoting budget discipline, improving functioning of the public sector, fostering greater accountability, and fighting the global menace of corruption. Despite worldwide calls for greater disclosure, empirical analyses of whether and how fiscal transparency actually affects governance outcomes are still limited. This study draws on public choice and principal–agent theories to demonstrate how public disclosure of budgetary information helps deter government corruption. The data from 95 countries over the period 2006–14 provide evidence that more fiscally transparent countries are perceived as less corrupt. We also find that fiscal transparency matters most at the final stages of the budget process when information disclosure reflects actual government spending. Data also confirm that a Citizens Budget can serve as a strong anti-corruption tool.     

How learning aggregates: a social network analysis of learning between Swedish municipalities

Using a unique data set of learning among all 290 Swedish municipalities, we use social network analysis to analyse how learning networks aggregate nationally. To facilitate this analysis, we describe five ideal-typical patterns of aggregation: core-periphery, small world, top-down regionalism, bottom-up regionalism and urban hierarchy. Each of these ideal-types has important implications for how ideas, information and innovation will circulate among municipalities. Social network analysis allows us to both isolate these patterns and to appreciate composite patterns. The analysis indicates that Swedish municipalities are a small-world network with regional and hierarchical elements. County seats serve an important role as network hubs.     

Integrity Systems,Values, and Expectations: Explaining Differences in the Extent of Corruption in Three Spanish Local Governments

Our article attempts to explain the differences in the extent of corruption related to urban planning in three Spanish local settings, all of them being important touristic resorts: Marbella, a municipality in the Costa del Sol with a very high level of corruption; Lanzarote, in the Canary islands with a high incidence of corruption despite its pioneering role in establishing innovative policies to limit urban (touristic) growth; and Menorca, in the Balearic Islands where corruption has been very low. We argue that the explanations focusing on the different features of the local integrity systems (LISs) face difficulties to account for the variations in the incidence of corruption across these Spanish municipalities: despite some interesting differences, the LIS of the cases considered is basically quite similar. Thus, we turn to the analysis of social values and social expectations on the political system by local citizens, testing whether a different set of citizens’ values and expectations on the behavior of local decision makers may explain this local variation in corruption practices. The article presents the results of a public opinion survey on values and expectations administered in the three cases. Against our expectations and the literature on the topic, no significant difference in shared social values and expectations has been found. The article shows that, as for an empirically tested explanation of the cross-local variations in the degree of urban corruption in Spain, the jury is still out.     

Institutions and Bribery in an Authoritarian State

Scholars have suggested that corruption could serve as a substitute for property-protecting institutions in developing countries, but very few empirical studies have been conducted to test this theory. Most existing studies on the determinants of corruption are cross-national, rely on perception-based measures, and focus on economic development, regime type, and market structure as explanatory variables. Little is known about why corruption occurs in an authoritarian state at the micro level. We theorize bribery as a bargaining process between a firm and a rent-maximizing public official, and we assume that graft-paying firms face different sets of rules and regulations, which govern firms' costs and benefits of bribing. We test the hypothesis that firms' bribes are determined by the rigor of their internal auditing control and the quality of property-protecting institutions. We use entertainment and travel costs directly observed in a large-scale firm-level survey in China as a proxy for corruption. Our study implies that firms operating in a weak property rights regime rely on political connections as a substitute for formal legal protection. The findings shed light on the literature on property rights, corruption, and East Asian development.     

Amalgamation Impacts on Local Public Expenditures in Sweden

This paper concerns amalgamation impacts on local public expenditures. The empirical analysis is based on the extensive 1952 municipal reform in Sweden. The 1952 reform amalgamated municipalities in a way that they had at least 2,000–3,500 inhabitants. This was done in the belief that larger municipalities would improve administration efficiency and public services by exploiting economies of scale. The results show that the reform had a negative impact on expenditures as long as the municipalities did not exceed a critical size.     

The spread of famine in Africa: Avoiding the worst

The aim of this article is to provide an evaluation of Uganda's current strategy to fight corruption. Like many countries on the African continent, Uganda has deemed it necessary to make attempts to reduce and control corruption within the public sector. As awareness of the deleterious and debilitating effects of corruption has grown, so too have both internal political factors and external pressures from aid donors increased in order to push for fundamental change in this respect. In terms of the donors, many have stipulated specific conditions relating to a good governance agenda based upon adherence to public integrity and minimum standards of public conduct. Sensitivity to pressure also stems in part, from a wish by government to be seen to be actively responding to donor concerns. Internal pressures stem from a growing desire by the public to demand accountability from those in government.     

Managers’ Turnover in the Public Sector—The Role of Psychosocial Working Conditions

An important challenge for public organizations is to attract and retain skilled managers. The present study explores how profiles of psychosocial working conditions, assessed by the combination of managerial-specific job demands and job resources, longitudinally predict managers’ turnover intentions and actual turnover in Swedish municipalities. Considerable effects of managers’ psychosocial working conditions on turnover intentions but not on actual turnover were found. Thus, poor working conditions may result in psychologically detached managers in public organizations, which may have considerable and costly effects on both the organizations and the managers, in terms of decreased commitment, performance, and impaired health.     

Socioeconomic Development and Voluntary Associations in Swedish Municipalities

Abstract

This paper explores the link between voluntary associations and socioeconomic development in Swedish municipalities. According to previous research in the field of social capital, the causal flow goes from having many associations to a high level of socioeconomic development. It has been argued, however, that the causal flow from the level of socioeconomic development to the level of social capital is so weak that it can be ignored. This paper tests a simple simultaneous equation model in order to test whether the causal flows from socioeconomic development to social capital and the inverse are simultaneous. The study is carried out at an aggregated level (the municipalities) that corresponds to the lowest administrative level in Sweden. The results indicate that the socioeconomic development cannot be ignored and that there is a simultaneous relationship. Moreover, the empirical findings indicate that the relationship is negative between the variables expressing socioeconomic development and associational density.     

Curbing Corruption in Public Administration: A Case Study from Italy

The aim of this article is to verify whether the historic sentence, no. 500/1999 of the Italian Legitimacy Court (Corte di Cassazione) in Plenary Session, may have contributed to diminishing bribery in Italy, by increasing the area of liability for both civil servants and the public administration. The empirical analysis is based on a case study conducted in Sicily, in the province of Catania, using a unique data set. The main results of the article are: paying bureaucrats by means of an incentive wage regimes may not be effective in reducing corruption; an extension of the liability rule for the public administration and civil servants may discourage the phenomenon of bribery; and, the perfect specification of property rights helps to reduce corruption.     

Executive-Led Governance or Executive Power ‘Hollowed-Out’—The Political Quagmire of Hong Kong

New Zealand has long enjoyed a reputation as a country with a corruption‐free state sector. However, social change and the state sector reforms of the 1980s and 1990s, have rendered that status less secure. While hard‐core corruption does not yet appear to be a major problem, what constitutes corruption can be a function of changing public perceptions and attitudes. Four main types of behaviour of public officials are identified, all of which have a bearing on how corruption is perceived. In New Zealand, there is casual evidence that hard‐core corruption might be more common today than in the past, but the official attitude to the possibility of it increasing seems to be overly sanguine, partly as a result of a very narrow definition of corruption. Vigilance could be enhanced by a stronger role for Parliament's agency, the Office of the Controller and Auditor‐General.     

Public Nursery School Costs and the Effects of the Funding Reforms in Japan

Using a panel dataset of 983 municipalities across Japan, this article investigates the impact of the funding reforms in 2004 on public nursery schools’ operating costs. We found that municipalities responded differently to the reforms, depending on their fiscal strength and city scale. In areas with relatively large populations, fiscally stronger municipalities were likely to spend less on public nursery schools in the wake of the reforms, while municipalities in smaller cities spent more. Besides, municipalities that were not compensated for the loss of the national subsidy reduced expenditures in large cities. In small cities, on the other hand, such municipalities actually increased expenditures.     

Is Corruption Really Bad for Inequality? Evidence from Latin America

This article presents new evidence on the relationship between corruption and income inequality. Using a panel data methodology, we find that lower corruption is associated with higher income inequality in Latin America. This result is in contrast to other empirical studies but it makes sense in Latin America for a number of reasons. The finding of an inverse relationship between inequality and corruption suggests that institutional reform policies by themselves may be misguided.     

Scale economies in local public administration

A renewed interest in decentralisation has profoundly affected local public governance around the world. Faced with an increasing number of tasks, Dutch municipalities have recently sought physical centralisation, merging into larger jurisdictions in order to target new policy areas more effectively and cost efficiently. Is such a policy of physical centralisation wise? We study economies of scale in local public administration, and find – given transfer payments from central government and current cooperation between municipalities and after controlling for geographical, demographic and socioeconomic variables – substantial unused scale economies of 17% for the average municipality. Between 2005 and 2014 the optimum size of municipalities increases from around 49,000 to 66,260 inhabitants, pointing at an increased importance of fixed costs relative to variable costs in local public administration.     

What is the opposite of corruption?

Corruption has turned out to be difficult to define and what should be counted as the opposite to corruption remains widely disputed. If the goal for a post-conflict society is not only to become democratic and prevent a return to violence but also to reduce systemic corruption, we need to know what it is that should be fought and how the opposite to systemic corruption should be conceptualised. To define the opposite to corruption, choices have to be made along four conceptual dimensions. These are universalism vs relativism, uni- vs multidimensionality, normative vs empirical and whether the definition should relate to political procedures or policy substance. As a result of this conceptual analysis, it is argued, a universal, one-dimensional, normative and procedural definition should be preferred. The suggested definition is that of impartiality as the basic norm for the implementation of laws and policies. This conceptual analysis ends with a discussion of why such a norm has historically and in the contemporary world been hard to achieve and why it is especially problematic in post-conflict societies.     

The Implications of Endemic Corruption for State Legitimacy in Developing Nations: an Empirical Exploration of the Nigerian Case

There is an extensive literature on the ramifications of corruption for economic growth, as well as for democracy. Largely unexplored, however, is how corruption works to lessen government legitimacy and empower violent anti-state movements. In this article, the perception of corruption in Nigeria is considered. Noting that Nigeria must suppress the violent extremist group Boko Haram in order to continue to govern the nation, the connections between Nigerian perceptions of corruption and support for the movement are treated. Until this research, however, there existed no empirical evaluation of this relationship. Using analysis of a survey of over 10,000 Nigerians accomplished in 2012 and 2013, we show that issues of state illegitimacy and endemic corruption have contributed to Nigeria’s present security crisis by fomenting support for non-state violent actors.     

Intermunicipal cooperation,public spending and service levels

ABSTRACT

Local governments can increase size in particular policy fields through cooperation with other local governments. This is often thought to improve efficiency, but there is little empirical evidence supporting this hypothesis. We study the case of the Netherlands, which has been a veritable laboratory of intermunicipal cooperation (IMC), using panel data for 2005–2013. We find no evidence that IMC reduces total spending of the average municipality. Indeed, IMC seems to increase spending in small and large municipalities, leaving spending in mid-sized municipalities unaffected. In one specific field, tax collection, spending may be reduced through IMC. Spending in this field is low, which may explain why total spending is unaffected. Instead of lowering spending, municipalities may have used possible cost savings as a result of IMC to improve public service levels. We do not find evidence substantiating this hypothesis, however.