Lobbying and Corruption Dr James Tremewan (james.tremewan@univie.ac.at) Transparency and Corruption
Introduction Tansparency and corruption • In theory, transparency in public spending and bureaucratic activities should reduce corruption: • Increases probability corruption is exposed. • Increases probability corruption is punished. • Attempts to reduce corruption by building capacity of public institutions responsible for enforcing public sector accountability (judiciary, police, financial auditors) may fail because of weak incentives or corruption within these institutions. • In general, crimes are more likely to be punished if it is the potential victims who enforce punishment, as they typically have the greatest incentive. But this requires they have sufficient information. • Can corruption be reduced by greater public awareness of public spending and individual rights? 2/12
Introduction Tansparency and corruption • The power of information in public services: Evidence from education in Uganda; Ritva Reinikka and Jakob Svensson, Journal of Public Economics , 2011. • Empirical study on effect of public information campaign in newpapers in reducing embezzlement of public funds intended for schools. • Transparency and Corruption: Evidence from India; Leonid Peisakhin; Journal of Law and Economics , 2012. • Field experiment comparing impact of bribery and requests for information using a freedom of information act on reducing waiting time for bureaucratic services. 3/12
The power of information in public services The power of information in public services: Pre-campaign • Primary education in Uganda is financed by a “capitation grant”: money disbursed to schools nine times per year by central government based on the number of enrolled students. • In 1996 a study found that schools received on average only 24% of the grant, the rest diverted by local officials and politicians. • In 1997, the central government began to regularly publish data in a number of newspapers on the monthly capitation grant transfers: Enabled head teachers and parents to identify when money went missing. • Corruption could be punished through: • Reporting to higher authorities (ineffective due to corruption and weak incentives?). • Not re-electing guilty politicians. • Social pressure, verbal complaints. 4/12
The power of information in public services The power of information in public services: Post-campaign • In 2002 a study found that schools now received on average 80% of their capitation grant. • However, there were many other changes over the same period, so how much of improvement was due to information campaign? • The authors use distance of the school from the nearest newspaper outlet to identify effect of campaign (schools are rural, so sometimes large distances, and newspapers not typically delivered by post). • Main findings: • After campaign, distance to newspaper outlet negatively associated with proportion of grant received: a school “close” to an outlet suffers 25 p.p. less from corruption than a “far” one. No correlation before campaign. • Reduction in corruption associated with an increase in student enrollment. 5/12
Transparency and Corruption: Evidence from India Transparency and Corruption: Evidence from India • Access to information can only diminish corruption if the public have power to act against government officials: • In a highly stratified society, do relatively powerless slum-dwellers benefit from information as much as the middle-class? 6/12
Transparency and Corruption: Evidence from India History on Freedom of Information legislation in India • 1975 and 1982: rulings by Supreme Court that government should disclose information: “no democratic governmentcan survive without accountability, and the basic postulate of accountability is that people should have information about the functioning of the government” . • 1990’s: Civil society activists agitate for for FOI laws. • 1997, 2000, 2001: state level FOI laws passed in Tamil Nadu, Rajasthan, and New Dehli. • 2002: Attempt to introduce a national FOI law, but defeated by politicians from all parties and senior civil servants. • 2005: Support by Sonia Gandhi helped creation of Right to Information Act (RTIA). 7/12
Transparency and Corruption: Evidence from India Right to Information Act • Main function: to ensure public is fully informed about government activities. • Also provides mechanism to require public officials to respond to complaints: • Written (sometimes phone or email) request for information sent to public information officer (PIO) for fee of Rs. 10. • Must be responded to within 30 days, or complaint can be filed with the state information commission. • If information insufficient, appeal can be made for more info at higher levels. • Sanctions: • PIOs can be fined (but seldom are). • Failures to disclose information can cause officials not to be promoted. 8/12
Transparency and Corruption: Evidence from India Field Experiment • Registration on electoral role needed to vote, but also for voter ID card which is needed for job applications, receipt of government benefits, etc. • Legal obligation for applications to be processed within 60 days. • Groups of urban-poor (income: $1.50/day) and middle-class (income: $10/day) recruited to register on electoral role under three different treatments: • RTIA: after application, RTIA requests sent asking: • What is the current status of my application? • What is the average waiting time? • Bribe: Rs. 1,000 sent with application (“standard” level of bribe). • Control: no RTIA request or bribe. 9/12
Transparency and Corruption: Evidence from India At end of data collection (11 months after applications) 74% of Urban Poor control group still waiting! Pictures assume outstanding applications completed on final day. 10/12
Transparency and Corruption: Evidence from India At end of data collection (11 months after applications) 43% of Middle Class control group still waiting! Pictures assume outstanding applications completed on final day. 11/12
Transparency and Corruption: Evidence from India Field Experiment • Both RTIA request and treatment reduce waiting times by more than half, with the bribe being the most effective. • RTIA requests made 20 (37) days after application in the Urban Poor (Middle Class) treatment, and the author suggest that if they were sent on the same day that the RTIA request would be as effective as a bribe. • More sophisticated analysis accounting for“censorship” of data at 11 months shows: • Urban poor wait longer than middle class in both control and bribery treatment. • No significant class difference in RTIA treatment. • Freedom of information requests can reduce corruption (by making bribes unneccesary), and reduce class differences in government services. • Important to educate about legal rights, especially the poor! 12/12
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