IDEAS home Printed from https://ideas.repec.org/p/kud/kuiedp/0811.html
   My bibliography  Save this paper

On the Impact of Digital Technologies on Corruption: Evidence from U.S. States and Across Countries

Author

Listed:
  • Thomas Barnebeck Andersen

    (Department of Economics, University of Copenhagen)

  • Jeanet Bentzen

    (Department of Economics, University of Copenhagen)

  • Carl-Johan Dalgaard

    (Department of Economics, University of Copenhagen)

  • Pablo Selaya

    (Department of Economics, University of Copenhagen)

Abstract

We hypothesize that the spread of the Internet has reduced corruption, chiefly through two mechanisms. First, the Internet facilitates the dissemination of information about corrupt behavior, which raises the detection risks to shady bureaucrats and politicians. Second, the Internet has reduced the interface between bureaucrats and the public. Using cross-country data and data for the U.S. states, we test this hypothesis. Data spans the period during which the Internet has been in operation. In order to address the potential endogeneity problem, we develop a novel identification strategy for Internet diffusion. Digital equipment is highly sensitive to power disruption: it leads to equipment failure and damage. Even very short disruptions (less than 1/60th of a second) can have such consequences. Accordingly, more frequent power failures will increase the user cost of IT capital; either directly, through depreciation, or indirectly, through the costs of protective devises. Ceteris paribus, we expect that higher IT user costs will lower the speed of Internet diffusion. A natural phenomenon which causes a major part of annual power disruptions globally is lightning activity. Lightning therefore provides exogenous variation in the user cost of IT capital. Based on global satellite data from the U.S. National Aeronautics and Space Administration (NASA), we construct lightning density data for a large cross section of countries and for the U.S. states. We demonstrate that the lightning density variable is a strong instrument for changes in Internet penetration; and we proceed to show that the spread of the Internet has reduced the extent of corruption across the globe and across the U.S. The size of the impact is economically and statistically significant.

Suggested Citation

  • Thomas Barnebeck Andersen & Jeanet Bentzen & Carl-Johan Dalgaard & Pablo Selaya, 2008. "On the Impact of Digital Technologies on Corruption: Evidence from U.S. States and Across Countries," Discussion Papers 08-11, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:0811
    as

    Download full text from publisher

    File URL: http://www.econ.ku.dk/english/research/publications/wp/2008/0811.pdf/
    Download Restriction: no

    References listed on IDEAS

    as
    1. Oyelaran-Oyeyinka, Banji & Lal, Kaushalesh, 2005. "Internet diffusion in sub-Saharan Africa: A cross-country analysis," Telecommunications Policy, Elsevier, vol. 29(7), pages 507-527, August.
    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. Goel, Rajeev K. & Nelson, Michael A. & Naretta, Michael A., 2012. "The internet as an indicator of corruption awareness," European Journal of Political Economy, Elsevier, vol. 28(1), pages 64-75.

    More about this item

    Keywords

    public corruption; internet; information;

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • H0 - Public Economics - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:kud:kuiedp:0811. 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: (Thomas Hoffmann). General contact details of provider: http://edirc.repec.org/data/okokudk.html .

    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 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.

    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.