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Do Infrastructure Reforms Reduce the Effect of Corruption? Theory and Evidence from Latin America and the Caribbean

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  • Liam Wren-Lewis

Abstract

This paper investigates the interaction between corruption and infrastructure policy reforms. I construct a simple model to illustrate how both an increase in regulatory autonomy and privatisation may in uence the effect of corruption. This interaction is then analysed empirically using a panel of 153 electricity distribution firms across 18 countries in Latin America and the Caribbean between 1995 and 2007. I find evidence that greater corruption is associated with lower firrm efficiency, but that this association is reduced when an independent regulatory agency is present. These results survive a range of robustness checks including instrumenting for regulatory governance and corruption. I also find slightly less robust evidence that private ownership further mitigates the association between corruption and efficiency.

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  • Liam Wren-Lewis, 2011. "Do Infrastructure Reforms Reduce the Effect of Corruption? Theory and Evidence from Latin America and the Caribbean," Working Papers ECARES ECARES 2011-026, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:eca:wpaper:2013/96919
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    Cited by:

    1. Estrin, Saul & Pelletier, Adeline, 2018. "Privatization in developing countries: what are the lessons of recent experience?," LSE Research Online Documents on Economics 87348, London School of Economics and Political Science, LSE Library.
    2. Castaneda, Araceli & Phillips, Michele & Jamison, Mark, 2014. "Considerations for the Design and Transformation of Regulatory Systems," MPRA Paper 113243, University Library of Munich, Germany.
    3. Antonio Estache & Caroline Philippe, 2012. "The Impact of Private Participation in Infrastructure in Developing Countries: Taking Stock of about 20 Years of Experience," Working Papers ECARES ECARES 2012-043, ULB -- Universite Libre de Bruxelles.
    4. Imam, M. & Jamasb, T. & Llorca, M. & Llorca, M., 2018. "Power Sector Reform and Corruption: Evidence from Electricity Industry in Sub-Saharan Africa," Cambridge Working Papers in Economics 1801, Faculty of Economics, University of Cambridge.
    5. Iossa, Elisabetta & Martimort, David, 2016. "Corruption in PPPs, incentives and contract incompleteness," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 85-100.
    6. Pless, Jacquelyn & Fell, Harrison, 2017. "Bribes, bureaucracies, and blackouts: Towards understanding how corruption at the firm level impacts electricity reliability," Resource and Energy Economics, Elsevier, vol. 47(C), pages 36-55.
    7. Tina Søreide, 2014. "Drivers of Corruption : A Brief Review," World Bank Publications - Books, The World Bank Group, number 20457, December.
    8. Imam, M. & Jamasb, T. & Llorca, M., 2019. "Political Economy of Reform and Regulation in the Electricity Sector of Sub-Saharan Africa," Cambridge Working Papers in Economics 1949, Faculty of Economics, University of Cambridge.
    9. Chang, Chong-Chuo, 2023. "The impact of quality of institutions on firm performance: A global analysis," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 694-716.
    10. Estache, Antonio & Wren-Lewis, Liam, 2010. "What Anti-Corruption Policy Can Learn from Theories of Sector Regulation," CEPR Discussion Papers 8082, C.E.P.R. Discussion Papers.
    11. Bensch, Gunther, 2019. "The effects of market-based reforms on access to electricity in developing countries: a systematic review," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 11(2), pages 165-188.
    12. Izak Atiyas, 2012. "Enhancing Competition in A Post-Revolutionary Arab Context: Does the Turkish Experience Provide any Lessons?," Working Papers 743, Economic Research Forum, revised Dec 2012.
    13. Randrianarisoa, Laingo M. & Oum, Tae Hoon & Yu, Chunyan, 2023. "Corruption and airport efficiency: A study on Asian airports," Transport Policy, Elsevier, vol. 130(C), pages 46-54.
    14. Randrianarisoa, Laingo Manitra & Bolduc, Denis & Choo, Yap Yin & Oum, Tae Hoon & Yan, Jia, 2015. "Effects of corruption on efficiency of the European airports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 79(C), pages 65-83.
    15. Graziano Abrate & Fabrizio Erbetta & Giovanni Fraquelli & Davide Vannoni, 2015. "The cost of corruption in the Italian solid waste industry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 24(2), pages 439-465.
    16. Imam, Mahmud I. & Jamasb, Tooraj & Llorca, Manuel, 2019. "Sector reforms and institutional corruption: Evidence from electricity industry in Sub-Saharan Africa," Energy Policy, Elsevier, vol. 129(C), pages 532-545.
    17. repec:tur:wpapnw:4 is not listed on IDEAS
    18. Estrin, Saul & Pelletier, Adeline, 2016. "Privatisation in Developing Countries: What Are the Lessons of Recent Experience?," IZA Discussion Papers 10297, Institute of Labor Economics (IZA).
    19. Antonio Estache & Liam Wren-Lewis, 2011. "Anti-Corruption Policy in Theories of Sector Regulation," Chapters, in: Susan Rose-Ackerman & Tina Søreide (ed.), International Handbook on the Economics of Corruption, Volume Two, chapter 9, Edward Elgar Publishing.

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    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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