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Is it the gums, teeth or the bite? Effectiveness of dimensions of enforcement in curbing corruption

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Abstract

Adding a somewhat new dimension to the substantial body of research on factors driving cross-national corruption, this paper examines the effectiveness of dimensions of enforcement in reducing corruption. The main novelty lies in comparing the relative influences of latent enforcement (police, judicial, and prosecutorial employment) versus actual enforcement (conviction rates) and enforcing institutions. Results show that piecemeal enforcement efforts to combat corruption by increasing enforcement employment would not be effective, rather comprehensive improvements in institutional quality by strengthening the rule of law or regulatory quality bear greater results. These findings are robust across indices of corruption that capture somewhat different aspects. Thus, in terms of the title of the paper, when it comes to corruption control, strong gums (institutions) are more effective than showing teeth (enforcement employment) or the bite (conviction rates).

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Notes

  1. Another dimension of bite would be the length or severity of punishment. However, given the presence of plea bargains and monetary and non-monetary punishments, that information is almost impossible to obtain for individual nations, let alone a cross-section of nations.

  2. See Chalfin and McCrary (2017) for a thorough overview of the literature on crime deterrence.

  3. Here ALLenforce = POLICE + JUDGES + PROSECUTORS.

  4. Studying the case of corruption related to diplomatic parking tickets, Fisman and Miguel (2007) note the role of culture and enforcement.

  5. This lack of significance of conviction rates might have partly to do with the fact that our measure of convictions includes all crimes and is not limited to corruption cases (see Table 1 for details).

  6. Given that institutions such as those captured by law and order and rule of law change slowly overtime, they are less susceptible to this simultaneity bias.

  7. Given the multidimensional nature of corruption, finding good instruments has been challenging in the literature. The use of rail network seems appropriate and is likely unique.

  8. Others have also used lagged endogenous variables as instruments while estimating the effects of corruption, for example, Jetter and Parmeter (2018) and Bhattacharyya and Hodler (2010).

  9. The consideration of models without GDP also makes the results potentially more applicable to all nations—developed and developing alike.

  10. Using data across U.S. states and employing conviction rates to denote corruption, Goel and Nelson (1998) found police employment and some types of judicial employment to lower corruption.

  11. One should bear in mind that the conviction rate variable is broad, applying to all crimes and not just corruption (see Table 1).

  12. Appropriate caution is advised in interpreting relative magnitudes based on indices.

  13. A potential criticism of this work may be that the main findings are based on cross-sectional data. While corruption and many other variables are available for a number of years across countries, the limiting factor preventing a panel data analysis is the availability of comparable law enforcement and conviction variables across countries over time.

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Authors and Affiliations

  1. University of Naples Parthenope, Naples, Italy

    Salvatore Capasso

  2. Institute for Studies on the Mediterranean (ISMed), National Research Council of Italy (CNR), Rome, Italy

    Salvatore Capasso

  3. Department of Economics, Illinois State University, Normal, IL, 61790, USA

    Rajeev K. Goel

  4. Kiel Institute for the World Economy, Kiel, Germany

    Rajeev K. Goel

  5. Department of Economics, Eastern Michigan University, Ypsilanti, MI, 48197, USA

    James W. Saunoris

Authors
  1. Salvatore Capasso
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  2. Rajeev K. Goel
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  3. James W. Saunoris
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Correspondence to James W. Saunoris.

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The authors’ names appear in alphabetical order and no seniority of authorship is implied. An earlier version of this paper was circulated as a CESifo working paper #7316. Capasso thanks the University of Naples Parthenope for funding received for the Competitive Research Project: “Institutional and Economic Imbalances in the Eurozone and the European Union”.

Appendix

Appendix

Table 5a First-stage results from Table 5
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Table 5b Reduced-form results from Table 5
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Table 6a First-stage results from Table 6
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Table 6b Reduced-form results from Table 6
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Table 7a First-stage results from Table 7
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Table 7b Reduced-form results from Table 7
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Table 8a First-stage results from Table 8
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Table 8b Reduced-form results from Table 8
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Table 5c Effectiveness of enforcement (“teeth”) in curbing corruption: accounting for possible two-way causality—dropping GDP as a regressor
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Table 6c Effectiveness of convictions (“bite”) and institutions (“gums”) in curbing corruption: accounting for possible two-way causality—dropping GDP as a regressor
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Capasso, S., Goel, R.K. & Saunoris, J.W. Is it the gums, teeth or the bite? Effectiveness of dimensions of enforcement in curbing corruption. Econ Gov 20, 329–369 (2019). https://doi.org/10.1007/s10101-019-00228-0

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