Public Choice

, Volume 165, Issue 1–2, pp 123–145 | Cite as

Construction corrupts: empirical evidence from a panel of 42 countries

  • Andreas P. Kyriacou
  • Leonel Muinelo-Gallo
  • Oriol Roca-Sagalés
Article
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Abstract

The construction sector, whether privately or publicly financed, is characterized by potentially large rents and government intervention making it vulnerable to corruption. Consistent with this, both case-study and survey evidence has been provided highlighting the problem of malfeasance in this sector. In this article, we test the proposition that a bigger construction sector is likely to be inimical to clean government based on a panel of 42 countries over the period 1995–2011. We control for a range of potentially confounding variables and the expectation that corrupt public officials may favor the development of this sector because it increases the volume of rents available to them. Our empirical evidence shows that a larger construction sector will tend to increase perceptions of the extent to which public power is exercised for private gain.

Keywords

Corruption Economic sectors Construction sector Empirical estimates Reverse causality 

JEL Classification

D73 L74 
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Notes

Acknowledgments

This paper has benefited from comments by two anonymous referees and William F. Shughart II. Andreas Kyriacou and Oriol Roca-Sagalés would like to acknowledge financial support from project ECO2012-31081 (Ministerio de Educación y Ciencia) as well as 2014 SGR 239 and XREPP (Direcció General de Recerca). Leonel Muinelo would like to acknowledge financial support from project I + D 2012 (Comisión Sectorial de Investigación Científica—Universidad de la República—Uruguay).

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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  • Andreas P. Kyriacou
    • 1
  • Leonel Muinelo-Gallo
    • 2
  • Oriol Roca-Sagalés
    • 3
  1. 1.Departament d’EconomiaUniversitat de GironaGironaSpain
  2. 2.Instituto de Economía de la Universidad de la RepúblicaMontevideoUruguay
  3. 3.Departament d’Economia AplicadaUniversitat Autònoma de BarcelonaBarcelonaSpain

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