Honduras is lagging behind its peers on most IPI components except fiscal transparency. With 75% of the population in the informal economy and a tightly captured state intent on managing elections and channeling resources to cronies, the country’s anticorruption has been mostly steered from US and the international community. Despite some civil society action, the number of enlightened citizens is small and no critical mass with a good governance program is likely to become empowered anytime soon.
Country: Honduras
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.