Argentina is lagging behind all its income peers and many of its regional peers on most IPI components, especially judicial independence and press freedom. It enjoys, however, high demand for good governance, with an active, digitally empowered civil society. As this seems to be the key asset, more administrative simplification and fiscal transparency, in particular in the key area of procurement might enable civil society’s more effective monitoring and deterrence of particularistic allocation of state resources, which seems to be the norm for the present.
Country: Argentina
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.