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Corruption and Infrastructure at the Country and Regional Level

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  • Gillanders, Robert

Abstract

This paper examines the relationship between corruption and infrastructure at both the country and regional level using the World Bank’s Enterprise Surveys data. A statistically significant and considerable relationship is established between the measure of corruption in the macro data and the measures of transportation and electricity infrastructure. Countries with more corruption tend to have worse infrastructure in the eyes of their firms. This link is shown to remain when one uses other measures of corruption and after controlling for GDP per capita, institutional quality and land area. At the regional level, the key result is unchanged. The magnitude and significance of this result is shown to vary by global region. Two stage least squares results, using distance from the equator as an instrument at the macro level support the simple OLS results and allow us to have some confidence that the causality runs from corruption to infrastructure. Finally, it is shown that within country variation in corruption has a significant effect on regional infrastructure.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 46679.

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Date of creation: 12 Apr 2013
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Handle: RePEc:pra:mprapa:46679

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Keywords: Corruption; infrastructure; cross country; regional variation;

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  1. Asiedu, Elizabeth, 2002. "On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?," World Development, Elsevier, vol. 30(1), pages 107-119, January.
  2. Shang-Jin Wei, 1997. "How Taxing is Corruption on International Investors?," NBER Working Papers 6030, National Bureau of Economic Research, Inc.
  3. Michael Breen & Robert Gillanders, 2011. "Corruption, Institutions and Regulation," Working Papers 201106, School Of Economics, University College Dublin.
  4. Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers.
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  10. Sanjeev Gupta & Hamid Davoodi & Rosa Alonso-Terme, 2002. "Does corruption affect income inequality and poverty?," Economics of Governance, Springer, vol. 3(1), pages 23-45, 03.
  11. Al-Marhubi, Fahim A., 2000. "Corruption and inflation," Economics Letters, Elsevier, vol. 66(2), pages 199-202, February.
  12. Charles Kenny, 2009. "Measuring Corruption in Infrastructure: Evidence from Transition and Developing Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 45(3), pages 314-332.
  13. Pierre-Richard Agénor, 2006. "A Theory of Infrastructure-led Development," Centre for Growth and Business Cycle Research Discussion Paper Series 83, Economics, The Univeristy of Manchester.
  14. Bose, Niloy & Capasso, Salvatore & Murshid, Antu Panini, 2008. "Threshold Effects of Corruption: Theory and Evidence," World Development, Elsevier, vol. 36(7), pages 1173-1191, July.
  15. Esfahani, Hadi Salehi & Ramirez, Maria Teresa, 2003. "Institutions, infrastructure, and economic growth," Journal of Development Economics, Elsevier, vol. 70(2), pages 443-477, April.
  16. Fredriksson, Per G. & Svensson, Jakob, 2003. "Political instability, corruption and policy formation: the case of environmental policy," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1383-1405, August.
  17. Robert Gillanders, 2011. "The Mental Health Cost of Corruption: Evidence from Sub-Saharan Africa," Working Papers 201126, School Of Economics, University College Dublin.
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