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Corruption and economic activity: Micro level evidence from rural Liberia

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  • Beekman, Gonne
  • Bulte, Erwin H.
  • Nillesen, Eleonora E.M.

Abstract

We study how corruption affects economic activities of households in rural Liberia. A proxy of corruption of community leaders is obtained by directly monitoring the diversion of inputs associated with a development project. We measure quantities of these inputs twice; before and after the chief stored them, and interpret any ‘gaps’ between these measurements as indicative of diversion by the chief (or corruption). We use this ‘gap’ proxy to explain variation in economic behaviour across respondents, and find that corrupt community leaders cause reduced levels of income generating activities that are economically important: corruption leads to a 50% reduction in rice planted and to nearly equally large reductions in trade activity.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 30 (2013)
Issue (Month): C ()
Pages: 70-79

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Handle: RePEc:eee:poleco:v:30:y:2013:i:c:p:70-79

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Web page: http://www.elsevier.com/locate/inca/505544

Related research

Keywords: Corruption; Development project; Agriculture; Investment; Trade;

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References

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Cited by:
  1. Zohal Hessami, 2013. "Corruption, Public Procurement, and the Budget Composition: Theory and Evidence from OECD Countries," Working Paper Series of the Department of Economics, University of Konstanz, Department of Economics, University of Konstanz 2013-27, Department of Economics, University of Konstanz.

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