Determinants of Corruption: Government Effectiveness vs. Cultural Norms

Abstract:     
In this paper we show that parking behavior of United Nations diplomats in New York City is strongly and consistently explained by the government effectiveness index of their respective countries. Government effectiveness index measures the quality of civil services, quality and quantity of public infrastructure as well as organizational structure of public offices. We compare our results with an earlier work which claims cultural norms of corruption to be a significant determinant of corruption. Our results show that controlling for the quality of government institutions, as defined by government effectiveness, reverses the coefficient on country corruption index and makes them statistically insignificant in all of the model specifications. Moreover, quite remarkably, we also find that the coefficient on the government effectiveness index is positive and statistically significant. Our results have important implications for anticorruption reforms which are advocated by multilaterals and foreign aid donors. If corruption is primarily controlled through government effectiveness, then interventions that focus on social norms or culture will be misplaced and unlikely to succeed.

Working Paper Series