1. Compliance shocks under low bureaucratic capacity
- Author:
- Daniel Tanis
- Publication Date:
- 03-2018
- Content Type:
- Working Paper
- Institution:
- Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
- Abstract:
- There is a general consensus on the negative eects of corruption on state capacity and welfare, but there is little understanding of how anti-corruption initiatives aect other areas of policy making. This paper frames anti-corruption policies as a delegation problem and examines the eects of enforcement shocks on bureaucratic action. As politicians increase the oversight of the bureaucracy to ensure that their actions are more compliant, bureaucrats react to a higher risk of punishment and choose safer actions. This model shows, however, that under low policy capacity an increase in oversight may in fact distance the bureaucratic action from the political preferences if punishment is highly asymmetrical. I test this hypothesis using data from the Brazilian random audit programme and detailed records of municipal spending during 2006-2012. I show that being audited substantially increases the chances that bureaucrats will face legal sanctions for the policies they attempt to deliver, but there are no corresponding sanctions for under-delivery. As a result, I nd that a random audit increases the gap between the budget planned by politicians at the beginning of the year and the resources actually spent by bureaucrats. This is a sizable eect where bureaucrats spend 1.5-2% less of the average municipal budget and 10-15% less of the discretionary expenses. This eect is disconnected from the political cycle and the reported corruption risk. The results suggest important insights for the design of anti-corruption policies: if the size and threat of punishment is large enough, not delivering policies may be a safer strategy than risking non-compliance. Hence, combining an increase in the risk of punishment with higher incentives for policy delivery could mitigate the potential side eects of audit-based anti-corruption programmes.
- Topic:
- Corruption, Political Economy, Bureaucracy, and Compliance
- Political Geography:
- Brazil and Global Focus