Jan Hanousek, Anastasiya Shamshur, Jiri Tresl, 18 September 2017

Bribery and corruption still present a significant cost to many countries today. This column examines how the efficiency of Eastern European private firms is affected by the level of corruption in their operating environment. An environment of high corruption has an adverse effect on firm efficiency, with ‘honest’ firms – typically foreign-owned and/or with female CEOs – penalised even more.

Karthik Muralidharan, Paul Niehaus, Sandip Sukhtankar, 07 July 2017

Emmanuelle Auriol, Jean-Philippe Platteau, 09 April 2017

The extent to which Islam is responsible for the problems encountered in countries in which it dominates has been the subject of much attention. This column explores the effect of religions with differing organisational structures on progressive institutional reforms, state corruption, and political stability. Decentralised religions such as Islam are more conducive to institutional stagnation and political instability than centralised religions such as Catholicism or Eastern Christianity, with negative consequences for long-term development.

Axel Dreher, Sarah Langlotz, Silvia Marchesi, 02 December 2016

Despite its many benefits, donor governments show little enthusiasm for budget aid, instead preferring to give project aid over which they have greater control. This column argues that budget aid is better than project-specific aid because it attributes full responsibility of expenditure to the recipient government, allowing voters to respond at the ballot boxes to how well the aid is used.

Elisa Gamberoni, Christine Gartner, Claire Giordano, Paloma Lopez-Garcia, 21 October 2016

Economists have argued that corruption in business can potentially grease the wheels of an economy. This column presents evidence from nine Central and Eastern European countries on the effects of bribes on the efficiency with which production factors are allocated across firms. The impact of corruption on capital and labour misallocation is larger the smaller the country, the lower its political stability and the weaker the quality of its regulation. This is evidence against the ‘grease the wheels’ hypothesis.

Philippe Aghion, Ufuk Akcigit, Julia Cagé, William Kerr, 29 August 2016

The relationship between taxation and economic growth is complex, and relies in large part on the efficiency with which taxes are used. This column examines the impact of corruption on this relationship. The boost to welfare from reducing corruption is substantially larger than the marginal gains from optimising the tax rate for an existing level of government efficiency.

Michael Callen, Saad Gulzar, Muhammad Yasir Khan, Ali Hasanain, 21 August 2016

Government employee absenteeism is often a serious problem in developing countries. One potential reason is government positions being appointed as a kind of patronage to reward political loyalty. This column presents the results of an intervention designed to address government doctor absenteeism in Punjab, Pakistan. The programme provided government inspectors with a smartphone app to streamline information flows, and improved inspection rates. The results support the political patronage hypothesis and provide encouraging support for data-driven policymaking.

Decio Coviello, Andrea Guglielmo, Giancarlo Spagnolo, 07 August 2016

Open competition is regarded as a crucial ‘preventative tool’ that limits government discretion and abuse of power when awarding procurement contracts. However, various studies have identified numerous drawbacks to using open auctions when contracting is imperfect. This column discusses the effects of increased buyer discretion on public procurement in Italy. Increased discretion raises the number of repeated wins by contractors, suggesting long-term relationships between buyers and sellers. Furthermore, productive buyer-seller relationships appear to outnumber corrupt ones.

Giacomo De Luca, Roland Holder, Paul Raschky, Michele Valsecchi, 21 July 2016

Ethnic favouritism is widely regarded as an African phenomenon, or at most a problem of poor and weakly institutionalised countries. This column uses data on night-time light intensity to challenge these preconceptions. Ethnic favouritism is found to be as prevalent outside of Africa as it is within, and not restricted to poor or autocratic nations either. Rather, re-election concerns appear to be an important driver of the practice.

Ruben Enikolopov, Maria Petrova, Konstantin Sonin, 20 June 2016

In addition to the traditional mass media, social media has become a channel through which citizens can hold public officials and corporate leaders to account. But social media commentators can be vulnerable to manipulation and reputational damage. This column uses data on a popular blogger in Russia to show that blogs are critical of corruption in state-controlled companies can lead to decreased profit diversion and corruption by the targeted companies. Social media appears to play an important role in improving accountability, particularly when traditional media is censored or political competition is limited.

Marcel Fafchamps, Julien Labonne, 31 May 2016

Politicians may have the opportunity to interfere with the allocation of public services to help to achieve their electoral objectives. This column argues that politicians share rents with central players to build and sustain coalitions. Using detailed data from the Philippines, it examines social networks and the allocation of municipal services. Households with greater potential to broker political coalitions do indeed appear to receive more services from their municipal government. 

Manuel García Santana, Josep Pijoan-Mas, Enrique Moral-Benito, Roberto Ramos, 23 May 2016

Spain enjoyed substantial growth in the decade prior to the Global Crisis, despite declining aggregate productivity. Recent research blames the poor productivity on different forms of a ‘financial resource curse’. This column argues that resource misallocation was particularly severe due to corruption and crony capitalism. This suggests future growth will require serious political reforms. 

Elias Papaioannou, 12 February 2016

Institutional redesign and reform are currently being debated and implemented at the EU and EZ levels. However, there is a growing institutional gap across member countries – especially between the core and periphery. This column illustrates the extent of this gap. Weak institutions have already stifled reform efforts, such as the Economic Adjustment Programs undertaken by Greece and Portugal. The success of pan-European reforms and the future of the Eurozone will require coordinated action to close this institutional gap.

Nishith Prakash, Marc Rockmore, Yogesh Uppal, 17 December 2015

India is electing more and more politicians that are, or have been, accused of criminal activity. This column asks whether accused – and potentially corrupt – politicians influence economic activity by focusing on data from road construction, which is often tied to corruption. The evidence tentatively suggests that caste-based and patronage politics favours lower quality politicians, who in turn deliver benefits to specific groups. This generally leads to lower aggregate growth.

Toke Aidt, Zareh Asatryan, Lusine Badalyan, Friedrich Heinemann, 28 November 2015

Central bank independence was supposed to end politically driven monetary policy. This column discusses new evidence showing a sizeable spike in the growth rate of cash and overnight bank deposits centred on election days. The spike is present in countries with weak political institutions, but not in OECD countries. The cycle seems to be related to the cash demand created by systemic vote buying.

Christos Koulovatianos, John Tsoukalas, 20 July 2015

As numerous Greek MEPs opposed the Eurozone summit deal, implementation will require a broad coalition of political parties. This column argues that corruption in Greek politics will prevent the formation of such a coalition. The heavy debt service leads parties to invent extreme ways of responding to super-austerity and to strongly oppose direct reforms that challenge existing clientelism. The way out is to sign a new agreement that combines debt restructuring and radical transparency reforms, including naming-and-shaming practices, to block clientelism in the medium and long run.

Jan Hanousek, Anna Kochanova, 04 May 2015

The evidence about the effect of bribery on economic growth is mixed. Some find it harmful while others believe it helps via a ‘grease the wheels’ effect. This column argues that the ambiguity can be explained by divergent effects of the mean and dispersion of corruption. A high bribery-mean retards productivity growth of firms, but a high bribery-dispersion facilitates performance of weak firms.

Nauro Campos, 13 June 2014

The 2014 FIFA World Cup is upon us. This column argues that there will be plenty of partying, but also plenty of protests fuelled by the gross mismanagement and limited economic benefits from hosting the Cup. Stadia may be ready, but much planned infrastructure has already been abandoned. Indeed, rent-seeking may be one reason nations bid for the Cup. Since the returns to transportation infrastructure are higher in poor countries, the international community should work to stamp out corruption so that poor countries can continue to host mega-events like the World Cup.

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