Macro-Corruption and Quality of Infrastructure and Social Programs

Abstract

Macro-corruption occurs in public contracting due to collusion (or not) between entrepreneurs and public officials, high level managers such as government ministers and country’s presidents, etc. Such corruption gives a discretionary power to entrepreneurs to reducing the cost of goods and materials used in executing public contracts whereby providing poor quality infrastructure and ineffectively executed social programs to the beneficiary populations. Our empirical studies on two different panels of 26 and 22 African countries supported the existence of a significant inverse correlation between a weak control of corruption or a high favoritism in allocation of public contracts and, on the one hand, the quality of infrastructure especially roads and electricity supply, and on the other hand, the number of infant deaths. Consequently, countries affected by macro-corruption encounter inequalities, less-developed private investment, and inertia in poverty reduction. Macro-corruption is more pervasive in developing countries like African countries. Although empirical researches investigating the negative effects of corruption are legion, political measures which aim to curb macro-corruption lack a supporting theoretical framework. This paper proposes such a framework which as well supports the need for African countries to rigorously monitor the implementation of infrastructure projects and social programs that are being executed under public contracts, and the necessity to collect data on the quality of public goods and services delivered by entrepreneurs under public contracts.

Keywords: Bribe, infrastructure quality, macro-corruption, social programs quality, social well-being.

JEL Classification: D63, H43, O11