Do Infrastructure Reforms Reduce the Effect of Corruption? Theory and Evidence from Latin America and the Caribbean
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 analy...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/08/18091392/infrastructure-reforms-reduce-effect-corruption-theory-evidence-latin-america-caribbean http://hdl.handle.net/10986/15925 |
| Summary: | 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. |
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