Growth, public investment and corruption with failing institutions

Corruption is thought to prevent poor countries from catching up with richer ones. We analyze one channel through which corruption hampers growth: public investment can be distorted in favor of specific types of spending for which rent-seeking is easier and better concealed. To study this distortion, we propose a dynamic model where households vote for the composition of public spending, subject to an incentive constraint reflecting individuals’ choice between productive activity and rent-seeking. In equilibrium, the structure of public investment is determined by the predatory technology and the distribution of political power. Among different regimes, the model shows a possible scenario of distortion without corruption in which there is no effective corruption but the possibility of corruption still distorts the allocation of public investment. We test the implications of the model on a set of countries using a two-stage least squares estimation. We find that developing countries with high predatory technology invest more in housing and physical capital in comparison with health and education. The reverse is true for developed countries.      

Victim or Victimizer: Firm Responses to Government Corruption

What is the relationship between government corruption and firm performance? To address this question, I conduct a review of articles published in the leading management journals on government‐business interactions pertaining to rent‐seeking activities and integrate findings from the fields of international business, social issues in management, public organization, institutional change, and corporate political activity. I find that while much empirical work corroborates the earlier findings suggesting a corrosive impact of government corruption on firm performance in general, management research also points to the heterogeneous impact of government corruption on individual firm performance, driven by the strategic activities conducted by firms in response to corruption. I propose an integrative model of firm strategy vis‐à‐vis corruption that predicts the activity choice of the firm as predicated by its organizational structure, political resources, industry regulation, and surrounding political and social institutions.     

An Income Tax Increase to Fund Higher Education: A CGE Analysis for Chile

An increase in income taxes to fund education was one of the demands made by the social movements that emerged in Chile in 2011. Currently, the Chilean Congress is enacting a tax reform to raise money for higher education. This study aims to show the dynamic effects on the general equilibrium of the Chilean economy under two alternative approaches: a subsidy to lower the price of higher education (public and private), and greater spending on public higher education to reduce household payments for education. The social accounting matrix (SAM) used to calibrate the computable general equilibrium (CGE) model has 38 economic sectors, including the production structure of private education and public education. The study mainly concludes that a subsidy policy has significant advantages over increasing higher public education spending, regarding its effects on variables such as GDP, investment, and household incomes, while both policies have a similar effect on poverty and income distribution.     

Organized crime and public spending: a panel data analysis

The aim of this paper is to investigate, empirically, what components of public spending imply a decreasing effect on organized crime and what components create opportunities for organized crime, discussing also the role of government efficiency. Using a panel data analysis, the results show a strikingly consistent pattern for the EU Member States. Organized crime mainly operates in the distribution of government spending for local public goods and public provision of private services. There is a decreasing effect on organized crime of the public expenditure devoted to education and social policy. Government efficiency in public spending is beneficial to limit the opportunities of the organized crime.     

谈切实提高反腐倡廉制度执行力

腐败是社会生活中的一个毒瘤,无论在哪个时代、哪个国家,人民群众无不对之深恶痛绝。在我国实行改革开放、加速社会主义现代化建设的进程中,一些腐败现象扰乱了经济秩序,涣散民心,阻碍社会进步。因此,党中央明确地指出：反对腐败是关系到党和国家生死存亡的重大政治斗争。据此,党中央建立起一整套反腐倡廉的制度,而对于如何切实提高该制度的执行力,文章提出了观点。     

Corporate Power and Expansive U.S. Military Policy

Military defense is generally treated in economics texts as a “public good” because the benefits are presumed to be shared by all citizens. However, defense spending by the United States cannot legitimately be classified as a public good, since the primary purpose of those expenditures has been to project power in support of private business interests. Throughout the course of the 20^th century, U.S. military spending has been largely devoted to protecting the overseas assets of multinational corporations that are based in the United States or allied nations. Companies extracting oil, mineral ores, timber, and other raw materials are the primary beneficiaries. The U.S. military provides its services by supporting compliant political leaders in developing countries and by punishing or deposing regimes that threaten the interests of U.S.‐based corporations. The companies involved in this process generally have invested only a small amount of their own capital. Instead, the value of their overseas assets largely derives from the appreciation of oil and other raw materials in situ. Companies bought resource‐rich lands cheaply, as early as the 1930s or 1940s, and then waited for decades to develop them. In order to make a profit on this long‐range strategy, they formed cartels to limit global supply and relied on the U.S. military to help them maintain secure title over a period of decades. Those operations have required suppressing democratic impulses in dozens of nations. The global “sprawl” of extractive companies has been the catalyst of U.S. foreign policy for the past century. The U.S. Department of Defense provides a giant subsidy to companies operating overseas, and the cost is borne by the taxpayers of the United States, not by the corporate beneficiaries. Defining military spending as a “public good” has been a mistake with global ramifications, leading to patriotic support for imperialist behavior.     

Intraurban interactions, social structure, and urban government expenditures: A stochastic model

A behavioral model is presented to identify the linkages between urban social structure and urban public expenditure data. The model is then tested on data from the 198 largest U.S. cities using first a principal components analysis to dimension the structural variables and second a regression model to measure the covariation between urban spending and selected measures of urban structure. The results suggest a relevant set of considerations for planning the urban fisc for purposes of State and Federal intergovernmental policy as well as for purposes of urban physical planning.     

The impact of adjustment and stabilization policies on infrastructure spending in Central America

During the 1980s and 1990s the countries of Central America experienced protracted fiscal crises and debt repayment problems which resulted in the implementation of structural adjustment agreements. Apart from attempting to reestablish fiscal balance and to control inflation, the proponents of adjustment policies sought to enhance growth by de-emphasizing the wasteful aspects of state spending while maintaining public expenditures on physical and human capital, which were believed to promote private sector productivity. By comparing a pre-debt crisis period with the period given by debt crisis and adjustment, the study reveals that the shares of government spending on human and, particularly, physical infrastructure dropped precipitously during the adjustment period. At the same time, the shares devoted to defense and subsidy categories—as well as interest payments on external debt—generally registered notable gains. The experience of adjustment policies in Central America indicated that substantial discrepancies existed between the idea and the reality.     

Measures of corruption and determinants of US corruption

This paper contributes to the literature by examining whether conclusions from empirical models of corruption determinants are robust with respect to three alternative measures of corrupt activity for the US states. Are the determinants of US corruption sensitive to the choice of the measure of corruption? Overall, the answer to this question is that the choice of the measure of corruption matters in explaining corruption. However, some findings are robust across measures. For instance, greater educational attainment lowers corruption, while greater judicial employment adds to corruption. Southern states were found to be more corrupt, ceteris paribus. We also provide evidence that it is important to control for enforcement efforts in empirical modeling using convictions as a measure of corruption. Significant differences, however, across corruption measures occur in a number of other instances. Specifically, the effects of urbanization, economic prosperity, population size, media, government spending, and enforcement are sensitive to the measure of corruption. Further, the influences of the nation’s foreign neighbors and of the location of the state relative to the nation’s capital remain unclear.     

Defense Spending and Unemployment Rates:

A bstract . Empirical evidence is provided, using vectorautoregressive techniques, that the employment impacts of defense spending are not equally distributed among racial and gender lines and across time. While increases in defense spending were generally found to be associated with increases in each of the unemployment rates , in the 1980s, it was observed that black males were most severely impacted by such spending, while white males were least severely impacted. It is hypothesized that this finding is consistent with a military industrial complex that has become increasingly complex and which focuses more on high tech weapons procurement than on personnel and maintenance concerns. In contrast, non-defense spending increases were associated with unemployment rate decreases in all categories. However, in terms of the distribution of these "favorable" impacts, white males benefitted the most and black males benefitted the least.     

Does corruption affect health outcomes in the Philippines?

We examine the effect of corruption on health outcomes in the Philippines. We find that corruption reduces the immunization rates, delays the vaccination of newborns, discourages the use of public health clinics, reduces satisfaction of households with public health services, and increases waiting time at health clinics. We also find that corruption affects public services in rural areas in different ways than urban areas, and that corruption harms the poor more than the wealthy. The research underlying this paper was supported by a grant from the World Bank, financed by the Netherlands Trust Fund.     

Does the nationalization of party systems affect the composition of public spending?

Do political institutions shape the structure of public spending? Based on a sample of elections in eighteen Western European countries over the period 1970–1998, this paper shows that governments’ margin of maneuverability to design and implement fiscal policies depends on the level of party linkage or the nationalization of party systems, defined as the extent to which parties are uniformly successful in winning votes across districts. The mechanism behind this argument is that in weakly nationalized countries there are additional transaction costs to change the structure of budgets as a consequence of the survival of local parties and interests. Therefore, the composition of public spending is more rigid here than in highly nationalized countries.     

人口老龄化背景下发达国家社会保障事业面临的财政压力

本文用数据详细介绍了人口老龄化给发达国家的社会保障事业带来了巨大压力,政府支出中用于社会保障和医疗保险的比例在以越来越快的速度上升,财政赤字和政府债务不断攀升.虽然老年人抚养比上升是导致这一结果的一个重要因素,但养老金制度和其他相关社会保障制度所导致的老龄人口劳动参与率的下降至少同样重要.这对于正处在建设初期的中国社会保障制度有着既现实又深远的借鉴意义.     

以阳光财务遏制贪腐丑行

面对信息不对称带来的种种困扰,信息虚假造成的各种恶果,信息屏蔽引发的官员贪腐,笔者越发认为实现信息对称对重塑公司治理结构,实现社会公平正义,遏制官员贪腐贿赂具有重要的实现意义。论文以官员贪腐为研究起点,分析成因,谋划措施,采用比较研究法,明确提出让财政晒晒太阳,实行阳光财务,是治理贪腐和贿赂的强力措施。     

Voice,exit and local capture in public provision of private goods

We developed a simple model on publicly provided private goods, such as health or education that highlights a vicious cycle faced by many developing countries. When public services are not of high quality due to mismanagement or corruption, the wealthy may switch to private alternatives. Their exit weakens the influence of citizen voice over politicians, since that leaves the poor as the only constituent with a stake in good governance. As the civic control over local governments weakens, government’s concern for social welfare declines even further, leading to more corruption and more corrosion in the quality of public services. Our model shows that establishing institutions (such as local taxation) that spread the costs and benefits of governance across the whole society is crucial for the success of local governments. Empirical results from the Philippines support this hypothesis.     

中国地方城市环境治理财政支出效率评估研究

持续的环境污染制约着城市未来的持续健康发展.城市环境的公共品特征需要地方财政的大量环境治理资金投入,因此提高环境治理的财政支出效率是解决目前财政投入资金不足的一个重要途径.本文对我国地方城市环境治理财政支出效率进行了评估,并实证检验了影响财政支出效率的环境变量,在此基础上提出进一步提高环境治理财政支出效率的政策建议.     

经济责任审计治理权力“期权化”研究

在以公共选择理论和博弈论作为权力“期权化”的理论基础上,分析了权力“期权化”腐败查处率对社会公众的信号效应,指出公共权力是经济责任审计与权力“期权化”的契合点,进而提出通过由“事”到“人”、由“物”到“人”、由“人”到“事”的途径对党政领导干部进行在任、离任、任后经济责任审计,并公告经济责任审计结果,以压缩权力“期权化”空间,使领导干部不愿、不敢和不能权力“期权化”,从而规范党政领导干部的从政行为,发挥国家审计在经济社会健康运行的免疫系统功能。     

THE IMPACT OF ETHNIC HETEROGENEITY ON EDUCATION SPENDING: A SPATIAL ECONOMETRIC ANALYSIS OF UNITED STATES SCHOOL DISTRICTS

In the public finance literature it is well understood that a community's spending can be affected by neighboring communities’ spending. It is relatively straightforward to see why these spillovers exist. For example, if a school district increases its spending on public education, this could affect the spending level of neighboring school districts. This paper uses spatial analysis to test the hypothesis that a school district's ethnic heterogeneity affects support for public education. Using a Spatial Lag Model and a national panel of U.S. school districts, I find that spatial dependence does exist in the data and that ethnic heterogeneity is negatively related to school district spending.     

THE BUDGET

Mr Clarke's first unified budget is politically highly astute. He has skilfully defused the household fuel VAT row. As we predicted in the October Economic Outlook, he has taken advantage of lower inflation and the public pay freeze to cut public spending with tough curbs on social security. This, together with the absence of measures against the pensions industry, has pleased the markets. But it will prove hard, though not impossible, to hit the new public spending targets beyond next year, particularly if inflation picks up. The further reduction in mortgage tax relief, the modest extension of the tax base, the action on tax avoidance and the introduction of road charges all make good economic sense, though the absence of measures to give the Bank of England more freedom for manoeuvre in monetary policy is disappointing. There is still the risk that the large tax increases on consumers bequeathed by Mr Lamont will slow recovery in 1994, but overall this is a budget that is good for the economy and good for Mr Clarke. It paves the way for further interest rate cuts of ½-1%. In this forecast release we consider the details of the Budget, dissect the Treasury forecast, and consider the plausibility of the spending targets, especially in later years.     

Corporate social responsibility and public procurement: How supplying government affects managerial orientations

How does government drive the corporate social responsibility of firms that supply it with goods and services? This paper reviews relevant theory and practice to describe ways in which public procurement shapes corporate social responsibility, and it builds upon theory to develop testable propositions to describe these influences. Using the case of U.S. defense procurement, statistical analysis indicates a significant relationship between the extent to which firms engage in defense procurement and the corporate social responsibility orientations of their managers. The findings have application both for social responsibility theory and for public procurement policy and practice.