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  This module is a resource for lecturers  

 

Causes of public sector corruption

 

There are a variety of factors at the country level that have an impact on the way in which governments and their services function, which in turn influences the existence and prevalence of public sector corruption. A non-exhaustive list of factors includes:

Country size

Research shows that countries that are geographically large and have a low population density can be more prone to corruption because of the increased difficulties in monitoring public officials in dispersed locations (Goel and Nelson, 2010).

Country age

Newly independent countries, or those that have recently transitioned from authoritarian regimes to democracies, may face more corruption owing to, for example, underdeveloped governance systems or rent-seeking opportunities created by the privatization of State assets (Goel and Nelson, 2010). In the context of corruption, rent-seeking means increasing one's share of existing wealth using public resources without creating new wealth for the State.

Resource curse

The public sector monopoly over the distribution and allocation of natural resources rights allows economic opportunities to be exploited for corrupt purposes. The website of the Natural Resource Governance Institute, stresses that "[g]iven their highly concentrated and highly profitable nature, the oil, gas and mining industries can generate the kind of political and private incentives that favor rent-seeking and institutional (or state) capture". Indeed, data show that many resource-rich countries suffer from poor governance and systemic corruption (Natural Resource Governance Institute, 2019).

Political instability

Political stability is associated with low corruption levels, whereas the probability of corruption is higher in politically unstable environments (Lederman, Loayza and Soares, 2005). Lack of stability in transitions to a newly elected government is particularly associated with public sector corruption. Notably, partisan administration can be the cause of corruption in certain countries. For a further discussion on corruption, peace and security, see Module 11 of the E4J University Module Series on Anti-Corruption.

Wages

Low wages and the resulting poverty in the public sector are also believed to contribute to corruption in some countries (Tanzi, 1998).

Lack of rule of law

Lawlessnessor poor rule of law is an important government-level contributor to corruption. The probability of corruption occurring might increase where the legal system is unable to provide sanctions for officials that engage in corruption (La Porta and others, 1999; Treisman 2000). In addition, corruption risks are higher in countries with less secure property rights, as corrupt means are used to ensure the security of these rights, where the legal system is unable to do so (Dong and Tongler, 2011).

Failure of governance

Shah (2006) argues that public sector corruption results from a failure of governance. Poor governance can arise from low quality public sector management, a lack of accountability, poor relations between the government and citizens, a weak legal framework, a lack transparency regarding public sector processes, and poor dissemination of information. A lack of competence and capacity due to inadequate training also contributes to failure of governance. The link between good governance and corruption is further discussed in Module 2 of the E4J University Module Series on Anti-Corruption.

Size of government

Research presents mixed findings on the relationship between corruption and the size of government. According to Goel and Nelson (2010) and Rose-Ackerman and Palifka (2016), the larger the government the more numerous the opportunities for rent-seeking by officials. In contrast, Gerring and Thacker (2005) find that the size of government is not correlated to higher levels of corruption. One conclusion that can be drawn from the mixed research findings is that the relationship between corruption and the size of government depends on other factors such as regime type, political stability and government structure (e.g. federal versus centralized).

Nature of bureaucracy

Tanzi (1998), Kaufman and Wei (1999), and Goel and Nelson (2010) all contend that government bureaucracy and government intervention in the economy promote corruption. Tanzi (1998) further asserts that "the existence of regulations and authorizations gives a kind of monopoly power to the officials who must authorize or inspect the activity". He also specifies the quality of the bureaucracy as an important causative factor for corruption.

Public spending at the local level

A study by Corrado and Rossetti (2018) addresses public corruption in various regions of Italy. Using a regional dataset on corruption crimes perpetrated by public officials, combined with demographic and socioeconomic variables, they found that the extent of public spending at the local level explains corruption, but that socioeconomic and cultural conditions also matter. Their findings suggest that "regions which have historically placed less importance on rooting out corruption may be stuck in a vicious circle of higher levels of corruption" and that "individuals who reside in regions where corruption is higher and persistent are less likely to be satisfied with public services".

Social capital

Social capital refers to the "links, shared values and understandings in society that enable individuals and groups to trust each other and so work together" (OECD, 2007c, p. 102). The study of Corrado and Rossetti (2018) found that regions with higher social capital are more likely to face lower levels of corruption. Their results confirm the studies of Paldam and Svendsen (2002) and Bjørnskov and Paldam (2004), who report that higher levels of social capital are associated with less corruption, although it is not clear whether social capital leads to less corruption or whether low corruption leads to greater social capital.

Large unique projects

Locatelli and others (2017) analyse different types of corruption and projects that are corruption prone. Their findings suggest that when public actors play a key role in "large unique projects" - i.e. publicly funded projects which occur once and have no predecessor to provide guidance - these projects are more likely to be affected by corruption compared to smaller and more routine projects.

Conflicts of interest

Conflict of interest has been defined by the Organisation for Economic Co-operation and Development (OECD, 2003) as "a conflict between the public duty and private interest of public officials, in which public officials have private-capacity interests which could improperly influence the performance of their official duties and responsibilities". An example of a conflict of interest includes the "revolving door" situation, in which public officials obtain lucrative posts in the private sector once they leave the public service, with the expectation that they will use their public sector contacts to benefit the private company (Ferguson, 2017). The types of "private interests" that could lead to a conflict of interest include objective things like a directorship in a company, but can also include subjective ideological, political and personal interests that may improperly influence public duties (Ferguson, 2017; Rose-Ackerman, 2014). The existence of a conflict of interest in and of itself is not necessarily unlawful. What is unlawful, however, is the failure to disclose a conflict of interest and/or the mishandling of it.

 
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