Abstract
This paper empirically examines the impact of corruption on the structure of government spending by sector. Using the three-stage least squares method on 64 countries between 1996 and 2001, we show that public corruption distorts the structure of public spending by reducing the portion of social expenditure (education, health and social protection) and increasing the part dedicated to public services and order, fuel and energy, culture, and defense. However, civil and political rights seem to be a stronger determinant of expense on defense than corruption. Our results are robust to instrumentation by the latitude of the country.
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I am very grateful to Thomas Bossuroy, Julie Lochard, Boris Najman, Waldemar Karpa, Pramuan Bunkanwanicha and the participants of the workshop on corruption at the Sixth Mediterranean Social and Political Research Meeting for their useful comments.
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Delavallade, C. Corruption and distribution of public spending in developing countries. J Econ Finan 30, 222–239 (2006). https://doi.org/10.1007/BF02761488
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DOI: https://doi.org/10.1007/BF02761488