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Do infrastructure reforms reduce the effect of corruption ? theory and evidence from Latin America and the Caribbean


  • Wren-Lewis, Liam


This paper investigates the interaction between corruption and governance at the sector level. A simple model illustrates how both an increase in regulatory autonomy and privatization may influence the effect of corruption. The interaction is analyzed empirically using a fixed-effects estimator on a panel of 153 electricity distribution firms across 18 countries in Latin America and the Caribbean from 1995--2007. Greater corruption is associated with lower firm labor productivity, but this association is reduced when an independent regulatory agency is present. These results survive a range of robustness checks, including instrumenting for regulatory governance, controlling for a large range of observables, and using several different corruption measures. The association between corruption and productivity also appears weaker for privately owned firms compared to publicly owned firms, though this result is somewhat less robust.

Suggested Citation

  • Wren-Lewis, Liam, 2013. "Do infrastructure reforms reduce the effect of corruption ? theory and evidence from Latin America and the Caribbean," Policy Research Working Paper Series 6559, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6559

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    Cited by:

    1. 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.
    2. Imam, M. & Jamasb, T. & Llorca, M. & Llorca, M., 2018. "Power Sector Reform and Corruption: Evidence from Sub-Saharan Africa," Cambridge Working Papers in Economics 1801, Faculty of Economics, University of Cambridge.
    3. Iossa, Elisabetta & Martimort, David, 2016. "Corruption in PPPs, incentives and contract incompleteness," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 85-100.
    4. Tina Søreide, 2014. "Drivers of Corruption : A Brief Review," World Bank Publications, The World Bank, number 20457.
    5. 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.
    6. 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.
    7. 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, vol. 24(2), pages 439-465.
    8. Estrin, Saul & Pelletier, Adeline, 2016. "Privatisation in Developing Countries: What Are the Lessons of Recent Experience?," IZA Discussion Papers 10297, Institute for the Study of Labor (IZA).

    More about this item


    Public Sector Corruption&Anticorruption Measures; National Governance; Governance Indicators; Banks&Banking Reform; Economic Theory&Research;

    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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