IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v79y2015icp65-83.html
   My bibliography  Save this article

Effects of corruption on efficiency of the European airports

Author

Listed:
  • Randrianarisoa, Laingo Manitra
  • Bolduc, Denis
  • Choo, Yap Yin
  • Oum, Tae Hoon
  • Yan, Jia

Abstract

The effect of corruption on airport productive efficiency is analyzed using an unbalanced panel data of major European airports from 2003 to 2009. We first compute the residual (or net) variable factor productivity using the multilateral index number method and then apply robust cluster random effects model in order to evaluate the importance of corruption. We find strong evidence that corruption has negative impacts on airport operating efficiency; and the effects depend on the ownership form of the airport. The results suggest that airports under mixed public–private ownership with private majority achieve lower levels of efficiency when located in more corrupt countries. They even operate less efficiently than fully and/or majority government owned airports in high corruption environment. We control for economic regulation, competition level and other airports’ characteristics. Our empirical results survive several robustness checks including different control variables, three alternative corruption measures: International Country Risk Guide (ICRG) corruption index, Corruption Perception Index (CPI) and Control of Corruption Index (CCI). The empirical findings have important policy implications for management and ownership structuring of airports operating in countries that suffer from higher levels of corruption.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:transa:v:79:y:2015:i:c:p:65-83
    DOI: 10.1016/j.tra.2015.03.025
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965856415000737
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.tra.2015.03.025?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gillen, David & Lall, Ashish, 1997. "Developing measures of airport productivity and performance: an application of data envelopment analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 33(4), pages 261-273, December.
    2. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    3. Adler, Nicole & Berechman, Joseph, 2001. "Measuring airport quality from the airlines' viewpoint: an application of data envelopment analysis," Transport Policy, Elsevier, vol. 8(3), pages 171-181, July.
    4. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
    5. Shang-Jin Wei, 2000. "How Taxing is Corruption on International Investors?," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 1-11, February.
    6. Dal Bo, Ernesto & Rossi, Martin A., 2007. "Corruption and inefficiency: Theory and evidence from electric utilities," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 939-962, June.
    7. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross‐Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    8. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2007. "Governance Matters VI: Aggregate and Individual Governance Indicators, 1996-2006," Policy Research Working Paper Series 4280, The World Bank.
    9. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 503-530.
    10. Méon, Pierre-Guillaume & Weill, Laurent, 2010. "Is Corruption an Efficient Grease?," World Development, Elsevier, vol. 38(3), pages 244-259, March.
    11. Gitto, Simone & Mancuso, Paolo, 2012. "Two faces of airport business: A non-parametric analysis of the Italian airport industry," Journal of Air Transport Management, Elsevier, vol. 20(C), pages 39-42.
    12. Obeng, Kofi & Assar, Nasir & Benjamin, Julian, 1992. "Total factor productivity in transit systems: 1983-1988," Transportation Research Part A: Policy and Practice, Elsevier, vol. 26(6), pages 447-455, November.
    13. Chi-Lok, Andrew Yuen & Zhang, Anming, 2009. "Effects of competition and policy changes on Chinese airport productivity: An empirical investigation," Journal of Air Transport Management, Elsevier, vol. 15(4), pages 166-174.
    14. Liam Wren-Lewis, 2015. "Do Infrastructure Reforms Reduce the Effect of Corruption? Theory and Evidence from Latin America and the Caribbean," World Bank Economic Review, World Bank Group, vol. 29(2), pages 353-384.
    15. Brissimis, Sophocles N. & Delis, Manthos D. & Tsionas, Efthymios G., 2010. "Technical and allocative efficiency in European banking," European Journal of Operational Research, Elsevier, vol. 204(1), pages 153-163, July.
    16. Georges Assaf, A. & Gillen, David, 2012. "Measuring the joint impact of governance form and economic regulation on airport efficiency," European Journal of Operational Research, Elsevier, vol. 220(1), pages 187-198.
    17. Oum, Tae H. & Adler, Nicole & Yu, Chunyan, 2006. "Privatization, corporatization, ownership forms and their effects on the performance of the world's major airports," Journal of Air Transport Management, Elsevier, vol. 12(3), pages 109-121.
    18. Suzuki, Soushi & Nijkamp, Peter & Rietveld, Piet & Pels, Eric, 2010. "A distance friction minimization approach in data envelopment analysis: A comparative study on airport efficiency," European Journal of Operational Research, Elsevier, vol. 207(2), pages 1104-1115, December.
    19. Hongbin Cai & Hanming Fang & Lixin Colin Xu, 2011. "Eat, Drink, Firms, Government: An Investigation of Corruption from the Entertainment and Travel Costs of Chinese Firms," Journal of Law and Economics, University of Chicago Press, vol. 54(1), pages 55-78.
    20. Johann Graf Lambsdorff, 2003. "How Corruption Affects Productivity," Kyklos, Wiley Blackwell, vol. 56(4), pages 457-474, November.
    21. Knack, Stephen & Keefer, Philip, 1995. "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators," MPRA Paper 23118, University Library of Munich, Germany.
    22. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    23. Mohsin Habib & Leon Zurawicki, 2002. "Corruption and Foreign Direct Investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(2), pages 291-307, June.
    24. Oum, Tae H. & Yan, Jia & Yu, Chunyan, 2008. "Ownership forms matter for airport efficiency: A stochastic frontier investigation of worldwide airports," Journal of Urban Economics, Elsevier, vol. 64(2), pages 422-435, September.
    25. George Emm Halkos & Nickolaos Tzeremes, 2010. "Corruption and Economic Efficiency: Panel Data Evidence," Global Economic Review, Taylor & Francis Journals, vol. 39(4), pages 441-454.
    26. Malighetti, G & Martini, G & Paleari, S & Redondi, R, 2009. "The Impacts of Airport Centrality in the EU Network and Inter- Airport Competition on Airport Efficiency," MPRA Paper 17673, University Library of Munich, Germany.
    27. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    28. Oum, Tae Hoon & Yu, Chunyan & Fu, Xiaowen, 2003. "A comparative analysis of productivity performance of the world's major airports: summary report of the ATRS global airport benchmarking research report—2002," Journal of Air Transport Management, Elsevier, vol. 9(5), pages 285-297.
    29. Fisman, Raymond & Svensson, Jakob, 2007. "Are corruption and taxation really harmful to growth? Firm level evidence," Journal of Development Economics, Elsevier, vol. 83(1), pages 63-75, May.
    30. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
    31. Adler, Nicole & Liebert, Vanessa, 2014. "Joint impact of competition, ownership form and economic regulation on airport performance and pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 64(C), pages 92-109.
    32. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1993. "Why Is Rent-Seeking So Costly to Growth?," American Economic Review, American Economic Association, vol. 83(2), pages 409-414, May.
    33. Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 2001. "Relative efficiency of European airports," Transport Policy, Elsevier, vol. 8(3), pages 183-192, July.
    34. Scotti, Davide & Malighetti, Paolo & Martini, Gianmaria & Volta, Nicola, 2012. "The impact of airport competition on technical efficiency: A stochastic frontier analysis applied to Italian airport," Journal of Air Transport Management, Elsevier, vol. 22(C), pages 9-15.
    35. Hessami, Zohal, 2014. "Political corruption, public procurement, and budget composition: Theory and evidence from OECD countries," European Journal of Political Economy, Elsevier, vol. 34(C), pages 372-389.
    36. Assaf, A., 2010. "Bootstrapped scale efficiency measures of UK airports," Journal of Air Transport Management, Elsevier, vol. 16(1), pages 42-44.
    37. Assaf, A., 2009. "Accounting for size in efficiency comparisons of airports," Journal of Air Transport Management, Elsevier, vol. 15(5), pages 256-258.
    38. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
    39. Hooper, P.G & Hensher, D.A, 1997. "Measuring total factor productivity of airports-- an index number approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 33(4), pages 249-259, December.
    40. Malcolm Abbott & Su Wu, 2002. "Total Factor Productivity and Efficiency of Australian Airports," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(3), pages 244-260, September.
    41. Barros, Carlos Pestana, 2008. "Technical efficiency of UK airports," Journal of Air Transport Management, Elsevier, vol. 14(4), pages 175-178.
    42. Aigner, D J & Amemiya, Takeshi & Poirier, Dale J, 1976. "On the Estimation of Production Frontiers: Maximum Likelihood Estimation of the Parameters of a Discontinuous Density Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 377-396, June.
    43. Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 2003. "Inefficiencies and scale economies of European airport operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 39(5), pages 341-361, September.
    44. Rajib Sanyal & Subarna Samanta, 2008. "Effect of perception of corruption on outward US Foreign Direct Investment," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 10(1), pages 123-140.
    45. Tsionas, Efthymios G., 2003. "Combining DEA and stochastic frontier models: An empirical Bayes approach," European Journal of Operational Research, Elsevier, vol. 147(3), pages 499-510, June.
    46. Clarke, George R. G. & Xu, Lixin Colin, 2004. "Privatization, competition, and corruption: how characteristics of bribe takers and payers affect bribes to utilities," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2067-2097, August.
    47. Oum, Tae H. & Adler, Nicole & Yu, Chunyan, 2006. "Privatization, Corporatization, Ownership Forms and their Effects on the Performance of the World’s Major Airports," 47th Annual Transportation Research Forum, New York, New York, March 23-25, 2006 208026, Transportation Research Forum.
    48. Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June.
    49. repec:hrv:faseco:30747160 is not listed on IDEAS
    50. Yan, Jia & Oum, Tae Hoon, 2014. "The effect of government corruption on the efficiency of US commercial airports," Journal of Urban Economics, Elsevier, vol. 80(C), pages 119-132.
    51. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
    52. Asim Ijaz Khwaja & Atif Mian, 2005. "Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1371-1411.
    53. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andreas P. Kyriacou & Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2018. "The efficiency of transport infrastructure investment and the role of institutions: an empirical analysis," Working Papers. Collection B: Regional and sectoral economics 1802, Universidade de Vigo, GEN - Governance and Economics research Network.
    2. VikniswariVija Kumaran* & Yew Yao Xi & Fan Sui Feng & Ho Xiao Jin & MakKah Weng & Teh Chun Pin & Shelena Soosay Nathan, 2018. "Measuring the Technical Efficiency of Oceania Continent Airports: Does Workload Unit Matters?," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 1120-1124:6.
    3. Kyriacou, Andreas P. & Muinelo-Gallo, Leonel & Roca-Sagalés, Oriol, 2019. "The efficiency of transport infrastructure investment and the role of government quality: An empirical analysis," Transport Policy, Elsevier, vol. 74(C), pages 93-102.
    4. Liu, Shuli & Wan, Yulai & Zhang, Anming, 2021. "Does high-speed rail development affect airport productivity? Evidence from China and Japan," Transport Policy, Elsevier, vol. 110(C), pages 1-15.
    5. Philipp Kunz & Richard Pospisil, 2020. "Comparison of German and Czech Public Procurement System and Economic Impacts," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 41-54.
    6. Liu, Shuli & Wan, Yulai & Ha, Hun-Koo & Yoshida, Yuichiro & Zhang, Anming, 2019. "Impact of high-speed rail network development on airport traffic and traffic distribution: Evidence from China and Japan," Transportation Research Part A: Policy and Practice, Elsevier, vol. 127(C), pages 115-135.
    7. Brzić, Barbara & Dabić, Marina & Kukura, Frane & Podobnik, Boris, 2021. "The effects of corruption and the fraction of private ownership on the productivity of telecommunication companies," Technology in Society, Elsevier, vol. 65(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, Dan, 2016. "Measuring aeronautical service efficiency and commercial service efficiency of East Asia airport companies: An application of Network Data Envelopment Analysis," Journal of Air Transport Management, Elsevier, vol. 52(C), pages 11-22.
    2. Adler, Nicole & Ülkü, Tolga & Yazhemsky, Ekaterina, 2013. "Small regional airport sustainability: Lessons from benchmarking," Journal of Air Transport Management, Elsevier, vol. 33(C), pages 22-31.
    3. Abbott, Malcolm, 2015. "Reform and efficiency of New Zealand's airports," Utilities Policy, Elsevier, vol. 36(C), pages 1-9.
    4. Krisztina Kis-Katos & Günther G. Schulze, 2013. "Corruption in Southeast Asia: a survey of recent research," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 27(1), pages 79-109, May.
    5. D’Alfonso, Tiziana & Daraio, Cinzia & Nastasi, Alberto, 2015. "Competition and efficiency in the Italian airport system: new insights from a conditional nonparametric frontier analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 80(C), pages 20-38.
    6. Güner, Samet & İbrahim Cebeci, Halil, 2021. "Multi-period efficiency analysis of major European and Asian airports under fixed proportion technologies," Transport Policy, Elsevier, vol. 107(C), pages 24-42.
    7. Paraschi, Elen Paraskevi & Georgopoulos, Antonios & Papatheodorou, Andreas, 2020. "Abiotic determinants of airport performance: Insights from a global survey," Transport Policy, Elsevier, vol. 85(C), pages 33-53.
    8. Myung Je Lee & Changhee Kim, 2018. "A network DEA aeronautical and non-aeronautical production model: an application to South Korea airports," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-12, December.
    9. Liu, Tingting & Liu, Yu & Ullah, Barkat & Wei, Zuobao & Xu, Lixin Colin, 2021. "The dark side of transparency in developing countries: The link between financial reporting practices and corruption," Journal of Corporate Finance, Elsevier, vol. 66(C).
    10. Zou, Bo & Kafle, Nabin & Chang, Young-Tae & Park, Kevin, 2015. "US airport financial reform and its implications for airport efficiency: An exploratory investigation," Journal of Air Transport Management, Elsevier, vol. 47(C), pages 66-78.
    11. lo Storto, Corrado, 2018. "Ownership structure and the technical, cost, and revenue efficiency of Italian airports," Utilities Policy, Elsevier, vol. 50(C), pages 175-193.
    12. Assaf, A. George & Gillen, David & Tsionas, Efthymios G., 2014. "Understanding relative efficiency among airports: A general dynamic model for distinguishing technical and allocative efficiency," Transportation Research Part B: Methodological, Elsevier, vol. 70(C), pages 18-34.
    13. Voltes-Dorta, Augusto & Pagliari, Romano, 2012. "The impact of recession on airports' cost efficiency," Transport Policy, Elsevier, vol. 24(C), pages 211-222.
    14. Bergantino, Angela Stefania & Intini, Mario & Volta, Nicola, 2021. "The spatial dimension of competition among airports at the worldwide level: a spatial stochastic frontier analysis," European Journal of Operational Research, Elsevier, vol. 295(1), pages 118-130.
    15. Adler, Nicole & Liebert, Vanessa & Yazhemsky, Ekaterina, 2013. "Benchmarking airports from a managerial perspective," Omega, Elsevier, vol. 41(2), pages 442-458.
    16. Yan Leung Cheung & P. Raghavendra Rau & Aris Stouraitis, 2012. "How much do firms pay as bribes and what benefits do they get? Evidence from corruption cases worldwide," NBER Working Papers 17981, National Bureau of Economic Research, Inc.
    17. Lai, Po‐Lin & Potter, Andrew & Beynon, Malcolm & Beresford, Anthony, 2015. "Evaluating the efficiency performance of airports using an integrated AHP/DEA-AR technique," Transport Policy, Elsevier, vol. 42(C), pages 75-85.
    18. Ahn, Young-Hyo & Min, Hokey, 2014. "Evaluating the multi-period operating efficiency of international airports using data envelopment analysis and the Malmquist productivity index," Journal of Air Transport Management, Elsevier, vol. 39(C), pages 12-22.
    19. Bin Dong & Benno Torgler, 2010. "The Consequences of Corruption: Evidence from China," Working Papers 2010.73, Fondazione Eni Enrico Mattei.
    20. Tae Hoon Oum & Katsuhiro Yamaguchi & Yuichiro Yoshida, 2011. "Efficiency Measurement Theory and its Application to Airport Benchmarking," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 13, Edward Elgar Publishing.

    More about this item

    Keywords

    Corruption effect; European airport operating efficiency; Residual (or net) variable factor productivity; Ownership form; Random effects model;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • H00 - Public Economics - - General - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:79:y:2015:i:c:p:65-83. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.