Corruption in Developing Countries (2012)

• To recap the literature:
  • The magnitude of corruption is still unknown--estimating is hard
  • Corrupt behavior has considerable negative consequences for efficiency and equity outcomes
  • Corrupt officials respond to monitoring and punishment, as well as market forces

Corruption in Developing Countries (2012)

• To recap the literature:
  • The magnitude of corruption is still unknown--estimating is hard
    • Perceptions
    • Direct observation (the rare person who takes notes on their illicit activities)
    • Estimate by subtraction (Indonesian road project)
    • Market inference
  • Corrupt behavior has considerable negative consequences for efficiency and equity outcomes
  • Corrupt officials respond to monitoring and punishment, as well as market forces

Corruption in Developing Countries (2012)

• To recap the literature:
  • The magnitude of corruption is still unknown--estimating is hard
  • Corrupt behavior has considerable negative consequences for efficiency and equity outcomes
    • Bribes with worse efficiency results than a tax
    • Increase cost of government activity
    • Underprovision of services
    • Failure to correct externalities
  • Corrupt officials respond to monitoring and punishment, as well as market forces

Corruption in Developing Countries (2012)

• To recap the literature:
  • The magnitude of corruption is still unknown--estimating is hard
  • Corrupt behavior has considerable negative consequences for efficiency and equity outcomes
  • Corrupt officials respond to monitoring and punishment, as well as market forces
    • We've seen examples of responses to monitoring and market forces
    • Transparency itself possibly not sufficient
    • Limited evidence on compensation and incentives

Corruption in Developing Countries (2012)

The Real State in DRC (2022)

• DRC traffic enforcement agents can charge violations and escort violators to a station for fee enforcement
• Unofficially station managers had a daily target (quota) of violators brought to station, then solicited bribes to get out of a charge and return their vehicle
• Descriptive results:
  • Real revenue (from unofficial sources) was 5.2 times larger than from fines
  • Drivers without connections paid 2.2 more in bribes
  • 82% of pull-overs had no visible infraction
• Quota treatment results:
  • A quota weakens both traffic management and deterrence
  • The level of the quota does not affect fine revenue (it is about corruption)

The Real State in DRC (2022)

• Quota treatment results:
  • A quota weakens both traffic management and deterrence
  • The level of the quota does not affect fine revenue (it is about corruption)

Obtaining a License in India (2007)

• Treatments:
  • Bonus: paid a sum of cash if they get the license quickly
  • Lesson: free driving lessons
  • Comparison: control group
• Control group: 71% of license getters did not take exam, 62% unqualified, paid 2.5x the official fee
• Bonus group were 24 pp more likely to obtain a license, 18 pp more likely to get license while unqualified, pay more in extralegal fees
• Lesson group are 12pp more likely to get and also still pay bribes--why?
  • Evidence of "endogenous red tape" that causes bureaucrats to arbitrarily fail some to push them towards agents who can be bribed

Obtaining a License in India (2007)

Obtaining a License in India (2007)

Obtaining a License in India (2007)

Obtaining a License in India (2007)

Obtaining a License in India (2007)

Had we run a survey simply asking individuals who had obtained licenses whether they paid bribes, we might have concluded that there was no corruption in this bureaucratic system. Instead, the detailed questions on payments and the process of obtaining a license allowed us to isolate the central role agents play in this system.