Resource windfall and corruption : evidence from a natural expirement in Peru.
Date
2011-04-28
Authors
Maldonado Zambrano, Stanislao, 1978-
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Sadoulet, Elisabeth
Journal Title
Journal ISSN
Volume Title
Publisher
Universidad de San Andrés. Departamento de Economía
Abstract
The relationship between economic conditions and corruption has been subject of an intense
discussion in the empirical literature due to the lack of good quality data on objective measures of
corruption and the presence of omitted variables, measurement error and reverse causality
problems. Using a rich and novel dataset that includes a complete set of bribery‐related questions
for the period 2002‐2006, I exploit an exogenous variation in the economic conditions of a set of
mineral‐rich local governments in Peru which is due to an interaction between a fiscal rule that
forces the central government to allocate 50% of the income taxes paid by mining companies to
these governments and the extraordinary rise of the international prices of mineral resources
observed since 2003. Using different empirical strategies, I find that, after the increase of prices of
mineral resources, the predicted probability of being asked to pay a bribe by a local public official
reduces by 1.5‐1.8 percentage points in districts with access to this type of transfers, being the
effect larger in mineral producer districts (2.7 percentage points). This represents a 52‐62%
reduction on the average probability. However, when focusing in areas most benefited from the
positive shock of mineral prices, I find a positive effect on corruption with an increase in the former
predicted probability of 4.3 percentage points. Taken together, these results suggest that the
increase of transfers due to positive shocks in mineral prices have differential effects on corruption
depending on the magnitude of the shock in local government revenues.
Description
Fil: Maldonado Zambrano, Stanislao, 1978-. Universidad de San Andrés. Departamento de Economía; Argentina.
Keywords
Mines and mineral resources -- Corrupt practices -- Peru -- Econometric models. , Political corruption -- Economic aspects -- Peru -- Econometric models.
Citation
Maldonado Zambrano, S. (2011). Resource windfall and corruption : evidence from a natural expirement in Peru.. [Tesis de maestría, Universidad de San Andrés. Departamento de Economía]. Repositorio Digital San Andrés. http://hdl.handle.net/10908/11066