Big Government NOT Linked to Greater Corruption

You hear it all the time: “Big government is the problem.” “We need to reduce the size of the government if we want to eliminate corruption.” As it turns out, just because the government grows in size doesn’t mean that corruption will grow along with it.

From a journal article published last year [Emphasis added]:

This study’s findings suggest that anticorruption policy is regularly hindered by oversimplistic analyses suggesting that “government size” must be synonymous with “corruption,” and that by cutting its government a country is concomitantly reducing the opportunities for the abuse of public office. In contrast with such analyses, this study found no evidence that government size is directly associated with corruption. In fact, the findings presented here indicate that generally the reverse is true. Government size is inversely linked to the level of corruption across nations.

You read that right — the size of the government is inversely linked to the level of corruption across nations. Meaning, as the size of the government grows, the level of corruption seems to go down.

If you had to guess, what would you say would be the most effective way to reduce corruption? There’s a strong hint in the title of the journal article. From the article [Emphasis Added]:

This study’s analysis suggests that an increase in nonprofit sector size should have the greatest anticorruption effect.

This study was done on a global-scale. Here’s a list of some of the countries that were included (there were 50 in all): Argentina, Canada, Denmark, India, Japan, Mexico, Poland, Sweden, and South Korea. The study also looked at corruption at the national level.

Maybe this is a good time to clarify that one can’t actually measure corruption as it happens because by definition, corruption happens in secret. In order to get around this, proxies like “Black Market” activity are used. In this study, the researchers relied on the “Corruption Perception Index.”

~

Even with studies like this being published, I worry that folks hellbent on “drowning government in the bathtub” will continue to use corruption in the opening salvo. And when pressed to face the facts of studies like this, they’ll explain it away as not being “relevant” to the US. So, I’d really like to see a study that specifically looks at government corruption in the US. Again, I realize the limitations of taking on a research question like this, but I think it would be interesting to look at the level of corruption in local and state governments. In fact, I’m sure there’d be differences in the level of corruption when moving from state to state, but I wonder if the difference in corruption would be negligible or if we might find something substantial. More than that, I’d be interested to see if government corruption is more strongly linked to one party or the other.

ResearchBlogging.orgThemudo, N. (2014). Government Size, Nonprofit Sector Strength, and Corruption: A Cross-National Examination The American Review of Public Administration, 44 (3), 309-323 DOI: 10.1177/0275074012465791

Advertisements

4 responses to “Big Government NOT Linked to Greater Corruption

  1. Do they correct for GDP? Nations with higher GDP also have larger governments (as a % of GDP) and less corruption – but the two are not necessarily causally linked.

    • From the article:

      This study employs two measures of government size. The first is the Frasier Institute’s Size of Government index in 2003. The index combines several measures of government size, namely, (a) the share of general government consumption in total consumption; (b) transfers and subsidies as a share of GDP; (c) government enterprises and investment as a share of gross investment; and (d) top marginal tax rate. The index measures government size in terms of the extent to which resources in the economy are directly controlled by government

      And:

      The second measure of government size is government expenditure as a proportion of GDP. As a simpler indicator, it offers an important robustness check on the analysis based on the Size of Government index.

      • What I mean is, though, do they control for GDP? i.e. for nations with similar per capita GDP, does government size relate to corruption?

      • Ah. They don’t seem to have included the data for each individual country (but that would have been interesting to look at, as you’re alluding to), but they did do this, with regard to controlling for GDP:

        To disentangle cause-effect relationships between corruption and government size as well as between corruption and nonprofit sector size, the analysis employs weighted two-stage least squares regression (2SLS). In 2SLS, an instrumental variable—that is correlated with the independent variable of interest, but not with the dependent variable once independent variable controls have been included—parses out the independent variable of interest’s exogenous effect from its endogenous one. Such an instrumental variable, therefore, controls for the potential reverse causality between corruption and government or nonprofit sector size. The instrument for government size is the natural logarithm of population size. A larger population permits economies of scale in the public sector and, consequently, a relatively smaller government is needed to meet population needs, other things being constant.

Any Thoughts?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s