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

  • Liam Wren-Lewis

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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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers ECARES with number ECARES 2011-026.

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Length: 22 p.
Date of creation: Sep 2011
Date of revision:
Publication status: Published by:
Handle: RePEc:eca:wpaper:2013/96919
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