Corruption and Infrastructure at the Country and Regional Level

Abstract

This paper examines the relationship between corruption and infrastructure at both the country and regional level using the World Bank's Enterprise Surveys data. A statistically significant and considerable relationship is established between the measure of corruption in the macro data and the measures of transportation and electricity infrastructure. Countries with more corruption tend to have worse infrastructure. At the regional level, the key result is unchanged. The magnitude and significance of this result is shown to vary by global region. Two stage least squares results, using distance from the equator as an instrument at the macro level support the simple OLS. Finally, it is shown that within country variation in corruption has a significant effect on regional infrastructure.

Corruption and the shadow economy at the regional level

“…Taking the analysis to the regional level offers a new perspective and means of testing these theories as well as being of interest in its own right. Within‐country variation in corruption has been shown to exist in the case of Italy by Golden and Picci () and in the countries covered by the ES by Gillanders (). Chaudhuri et al.…”

Gender and Corruption in Business

“…First, some have made use of reliable micro-data on corrupt activities from well-designed surveys (see for example Diaby & Sylwester, 2015;Gillanders, 2014). Using data from the Afrobarometer, Justesen & Bjørnskov (2014) show that males and younger people are more likely to pay bribes in general.…”

Institutions and information flows, and their effect on capital flows

“…Econometrically, decreases in the sizes on both coefficients when both institutions and information flows are not surprising due to the relationship between information flows and institutions. For instance, infrastructural development of countries are shaped by the institutional settings (see e.g., Henisz, 2002;Esfahani and Ramirez, 2003) where countries with better institutions tend to have higher infrastructural development (see, e.g., Gillanders, 2014). In other words, the findings are in the lines with the information flows being a mediator in the link from institutions to capital flows.…”

“…Firstly, we examine the relevance of information flows for the cross-country variation in capital flows per capita. Secondly, we also test the impact of institutional quality on information flows (e.g., Gillanders, 2014 finds that countries with better institutional quality have higher infrastructural development), and its indirect effect on capital flows per capita through its impact on information flows. This latter channel might also provide an additional mechanism for the institutions' effect on long-term economic development (see e.g., seminal papers of Acemoglu, 2001;Rodrik et al, 2004).…”