Does Expenditure in Public Governance Guarantee Less Corruption? Non-linearities and Complementarities of the Rule of Law

Abstract

Corruption is an endemic societal problem with profound implications in the development of nations. In combating this issue, cross-national evidence supporting the effectiveness of the rule of law seems at odds with poorly realized outcomes from reforms inspired in the academic literature. This paper provides an explanation for such contradiction. By building a computational approach, we develop three methodological novelties into the empirical study of corruption: (1) modeling government expenditure as a more adequate intervention variable than traditional indicators, (2) generating large within-country variation by means of bottom-up simulations (instead of cross-national data pooling), and (2) accounting for all possible interactions between covariates through a spillover network. Our estimates suggest that, the least developed a country is, the more difficult it is to find the right combination of policies that lead to reductions in corruption. We characterize this difficulty through a rugged landscape that governments navigate when changing the total budget size and the relative expenditure towards the rule of law. Importantly our method helps identifying the-country-specific-policy issues that complement the rule of law in the fight against corruption.

Subnational sustainable development: The role of vertical intergovernmental transfers in reaching multidimensional goals

“…Earlier works using similar models can be traced back to Castañeda et al [24]; who focus on socioeconomic indicators. Other precedents with applications to different problems can be found in Castañeda and Guerrero [25], who study the resilience of development when facing sudden disruptions in specific activities; Castañeda and Guerrero [26], who use a similar agent-based model to perform ex ante evaluations of specific budgetary allocations; Guerrero and Castañeda [22,23], who quantify policy coherence; and Guerrero and Castañeda [27], that evaluates the role of public governance mechanisms in the fight against corruption. 11 We provide the full details of the model in Appendix B, and highlight the most relevant features for this application here.…”

“…However, given a budgetary baseline through the contributions, the result suggests that participations are not necessary, as its performance would be quite poor. 27 Instead of additional federal transfers, the type of intervention that CHP needs is one of a structural, long-term, nature that can push its budgetary frontier (parameter α). Likewise, assigning participations to CHP would translate into missed opportunities in other states.…”