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The influence of government ideology on corruption: the impact of the Great Recession

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Abstract

This paper studies the relationship between government ideology and the level of perceived corruption, using a panel data of OECD countries covering the years 1996–2015, and the effect that the Great Recession has exerted on that relationship. We find that, before the onset of the Great Recession, governments formed by one (or more) right-wing parties are perceived as being around 1% more corrupt than those formed by one (or more) left-wing parties. We also find that misuse of public funds under coalitional governments is more likely to be perceived, that the longer the party of the current chief executive has been in office, the higher is the level of perceived corruption, and that minority governments and parties with a greater weight in the legislative chamber are also perceived as being more corrupt. However, the Great Recession has altered these relationships, increasing perceived corruption as the elections come closer, and softening or changing the impact of other political variables on perceived corruption.

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Fig. 1

Source: adaptation from the Worldwide Governance Indicators (WGI) project

Fig. 2

Sources: adaptation from the Worldwide Governance Indicators (WGI) project and from the Database of Political Institutions (Beck et al. 2001)

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Notes

  1. According to the Gallup database (2015 survey).

  2. For an extensive review of the effects of corruption, see Jain (2001).

  3. A clarifying state-of-the-art survey can be found in Dimant and Tosato (2017).

  4. The relationship between income distribution and corruption has been found to depend on the countries analyzed, as shown in Dobson and Ramlogan-Dobson (2010, 2012) for the case of Latin America. The poverty rate is also positively correlated with corruption, in Gupta et al. (2002).

  5. However, Pellegrini (2011) finds no empirical evidence on the effect of once being a British colony on corruption.

  6. For a review, see Potrafke (2016).

  7. Latvia was invited to join the OECD in 2016, and Lithuania and Colombia in 2018, bringing the number of member countries to 37. However, these incorporations took place out of our temporary sample, which is why these three countries are not considered in this study. In addition, some of the political variables do not cover Switzerland for the full sample, so this country is also excluded from the sample.

  8. More details in http://info.worldbank.org/governance/wgi.

  9. Other measures for the level of perceived corruption are based on citizens’ surveys, as the Eurobarometer. See Pellegata and Memoli (2016) for a deep analysis of this kind of indexes.

  10. Seats held by non-classifiable parties from an economic point of view are ignored (for example, parties that focus on religious, rural, or regional factors).

  11. The first period (1996–2006) is formed by 355 observations, and the second period (2007–2015) is formed by 278 observations.

  12. The reason for limiting the interaction of the crisis dummy to the political and electoral set of variables is threefold. First, to be consistent with previous literature (for example, Potrafke (2010), who includes in his work a "post-Soviet" dummy similar to our crisis dummy, and which is only interacted with the political and electoral variables). Second, for the very motivation of our research: to study the effect of the Great Recession on the impact that political and electoral factors have on corruption. Finally, we believe that the impact of the economic and demographic variables incorporated into our model is independent of the economic cycle: structural aspects of a country, such as the percentage of urban population, the population, or the percentage of Protestants, will hardly vary its impact on the level of corruption due to the effect of an economic crisis.

  13. Ratios, dummies and bounded variables, such as the WGI indices and the percentages, are included in levels, so only the per capita GDP and the size of the total population are included in logs.

  14. The only exception is the Model 3.8, which could be affected by mis-specification.

  15. If a government is made up of only right-wing parties, the ideology index takes value 1, while its value is 5 for governments made up of only left-wing parties. Considering that an increase of 1 point of this index is linked with 0.02 less corruption, governments made up only by right-wing parties are perceived as 0.08 points (0.8%) more corrupt than those made up only by left-wing parties.

  16. See Miller and Dinan (2009) for OECD evidence.

  17. We reject the null hypothesis of cross-sectional independence with values of the test from 2.790 (Model 3.8) to 5.662 (Model 3.7), thus rejecting the null hypothesis at a 1% level of significance in all the specifications.

  18. We do not show the whole model because all the non-political variables maintain their sign and impact, except for the loss of statistical significance of the percentage of urban population.

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Authors and Affiliations

  1. Universidad de Zaragoza, Gran Vía 2, 50005, Zaragoza, Spain

    Héctor Bellido & Lorena Olmos

  2. Universidad San Jorge, Autovía A-23 Zaragoza-Huesca Km. 299, Villanueva de Gállego, 50830, Zaragoza, Spain

    Juan A. Román-Aso

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  1. Héctor Bellido
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Correspondence to Héctor Bellido.

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The usual disclaimer applies. This paper has benefited from the comments of two anonymous referees. The authors bear the sole responsibility for the analysis and conclusions presented in this article. They acknowledge the financial support of the Spanish Ministry of Science, Innovation and Universities (project ECO2015-65967-R), the Regional Government of Aragon (Grant S32_20R; LMP71_18), and Universidad San Jorge.

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Table 6 Brief description of every variable included in the analysis
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Bellido, H., Olmos, L. & Román-Aso, J.A. The influence of government ideology on corruption: the impact of the Great Recession. Econ Polit 38, 677–708 (2021). https://doi.org/10.1007/s40888-020-00212-6

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