The Impact of Public Officials’ Corruption on the Size and Allocation of U.S. State Spending

Abstract

This article demonstrates the impact of public officials’ corruption on the size and allocation of U.S. state spending. Extending two theories of “excessive” government expansion, the authors argue that public officials’ corruption should cause state spending to be artificially elevated. Corruption increased state spending over the period 1997–2008. During that time, the 10 most corrupt states could have reduced their total annual expenditure by an average of $1,308 per capita—5.2 percent of the mean per capita state expenditure—if corruption had been at the average level of the states. Moreover, at the expense of social sectors, corruption is likely to distort states’ public resource allocations in favor of higher‐potential “bribe‐generating” spending and items directly beneficial to public officials, such as capital, construction, highways, borrowing, and total salaries and wages. The authors use an objective, concrete, and consistent measurement of corruption, the number of convictions.

What Causes Unethical Behavior? A Meta‐Analysis to Set an Agenda for Public Administration Research

“…These findings are particularly relevant because “[c]orruption in the public sector hampers the efficiency of public services, undermines confidence in public institutions and increases the cost of public transactions” (OECD ). Moreover, corruption “may distort government's public resource allocations” (Liu and Mikesell , 346).…”

Corruption and State and Local Government Debt Expansion

“…Arguably, the industry is vulnerable to corruption because it is closely linked to government contracts. Thus, empirical evidence suggests that it is common to bribe officials who have discretion in government contracts and regulation‐related industries (Kaufmann ; Kenny ; Liu and Mikesell ).…”

“…Corruption also hampers the efficient and effective resource allocation of governments. It makes public expenditure wasteful (Shleifer and Vishny ; Tanzi ; Tanzi and Davoodi ) and distorts the composition of public spending to favor public officials’ rent‐seeking behaviors at the expense of social sectors such as education and health (Delavallade ; Liu and Mikesell ; Mauro ).…”

HOW TO COMBAT CORRUPTION — A CIVIL SERVANTS´ VIEW

“…The consequences are that corruption harms democracy, impedes social fairness, diminishes trust and lower АДМИНИСТРАТИВНОЕ ПРАВО, ФИНАНСОВОЕ ПРАВО, ИНФОРМАЦИОННОЕ ПРАВО economic growth (Fisman & Svensson, 2005;Holmes 2006;Liu & Mikesell, 2014;Serritzlew et al 2012). To address the issue international organizations have recommended strengthening the institutional framework for anti-corruption policies (Lambsdorff 2007;Mccoy and Heckel 2001).…”