How Does Political Finance Regulation Influence Control of Corruption? Improving Governance in Latin America

In this paper, we address the question of how political finance regulation affects control of corruption in Latin America from a quantitative perspective. We present a Political Finance Regulation Index with panel data from 180 countries over 20 years (1996-2015). This index was developed using the IDEA Political Finance Database, and once created, was applied to assess the relationship between political finance regulation and control of corruption.

In order to do this, we use the equilibrium model of control of corruption developed by Mungiu-Pippidi (2015). We also included judicial independence and public investment, considered as a constraint and an opportunity to corrupt, respectively. Lastly, we use control variables for level of development.

Results show that, in Latin America, increases in political finance regulation are related with a deterioration of control of corruption. This relationship is statistically significant in the panel estimations. Inversely, the negative relationship between regulation and control of corruption becomes positive in countries with high levels of judicial independence. In a similar way, increases in opportunities to corrupt, represented by levels of public investment, have a significant and negative effect in control of corruption.

Study Assesses Use of Government Advertising in Argentina

Poder Ciudadano, Transparency International’s national chapter in Argentina, analyzes the use of government advertising as a potential source for corruption in the country.

The study points out that the national government’s share of the Argentine advertising market is about 9%, a very high number in comparison to other governments, such as in neighboring Brazil, where government advertisement is not more than 3% of the market, or even in the United Kingdom, where it is about 5%.

These data raise questions about the use of government advertisement to unduly influence media outlets, which might have less incentives to adopt critical positions in relation to the government and thereby risk losing a significant share of their advertising revenue. Moreover, the use of public resources for advertising can be a way to reward political supporters of the party in power, or even to by-pass restrictions on electoral advertising.

Poder Ciudadano lists some recommendations to avoid the use of public advertisement funds for political interests, such as limiting the amount of resources that can be used for advertisement, increasing monitoring by other government branches and also by media and civil society, and clearly establishing bans on the use of any reference to political parties.

For additional information read the article “Public service advertising – has political corruption found a new home?” on blog.transparency.org. The picture shown above is also featured in the article.