Liam Wren-Lewis

ODI Fellow, Ministry of Finance and Development Planning, Malawi and ECARES

Do infrastructure reforms reduce the effect of corruption? Evidence from Latin America

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Do infrastructure reforms reduce the effect of corruption? Evidence from Latin America

Liam Wren-Lewis (ODI Fellow, Ministry of Finance and Development Planning, Malawi, ECARES)

Lieu: IAE Paris – Salle B223
Date: Vendredi, 9 Mars, 2012 – 11:0012:30

Abstract: This paper investigates the interaction between corruption and infrastructure policy reforms. I construct a simple model to illustrate how both an increase in regulatory autonomy and privatization may influence the effect of corruption. This interaction is then analysed empirically using a panel of 153 electricity distribution firms across 18 countries in Latin America and the Caribbean between 1995 and 2007. I find evidence that greater corruption is associated with lower firm efficiency, but that this association is reduced when an independent regulatory agency is present. These results survive a range of robustness checks including instrumenting for regulatory governance and corruption. I also find slightly less robust evidence that private ownership further mitigates the association between corruption and efficiency.