On studying the unstudyable A quantitative literature review of proposed causes of corruption and how these have been studied Kristian Blindheim Master’s Thesis Department of Comparative Politics University of Bergen ii Abstract This thesis is a quantitative review of research on the causes of corruption. The aim is twofold: firstly to establish the degree of agreement between researchers regarding the causal effect of seven different explanatory dimensions on corruption. These explanatory dimensions are: economic liberalization, level of democracy, regime transitions, the strength of democratic traditions, the presence of a free media, level of economic development and natural resource dependency. I find that there is high agreement that economic liberalizations and regime transitions lead to more corruption. There is also high consensus that the presence of a free media and high economic development, respectively, lead to less. Concerning the effect of level of democracy, democratic traditions and natural resource dependency the findings are more diverse. About half of prior research concludes that level of democracy and stronger democratic traditions lead to less corruption. Also about half conclude that natural resource dependency leads to more corruption. The second aim of this thesis is to discover whether the disagreement between researchers can be explained by the data they have applied as operationalizations of corruption as the dependent variable. This is done through a series of logistic regressions, where the explanatory variables are the different data sources on corruption. These fall into the categories “perceptions based cross-national data”, “experience based cross national data” and “country-or region-specific studies”. The results show that applying experience based cross national data gives significantly lower likelihood for concluding that higher economic development leads to less corruption. It also makes it less likely to conclude that natural resources lead to more corruption. Applying perceptions based cross national data in some instances provide higher likelihood for observing significant effects of the explanatory dimensions treated in this thesis and sometimes lower likelihood. An interesting finding is that the Transparency International Corruption Perceptions Index and studies conducted with country- or region specific foci “agree” on the effects on corruption of all of the treated explanatory dimension where comparison is possible. This is counter to what is assumed based in theory. iii Acknowledgements On completing this project there are several people to whom I owe gratitude. First I must thank my tutor at the Department of comparative Politics, Professor Lise Rakner, for substantial and sound advice. Associate Professor Michael Alvarez and Post Doctor Leiv Marsteinstredet also deserve thanks for good advice and discussions regarding methodological choices. I also would like to thank the Department’s research groups on democracy and development and methods, respectively, for sound and honest advice on several occasions. In particular, thanks to Professor Tor Midtbø for encouraging me about the feasibility of the project. My friend, class mate and flat mate, Iver M. Fiksdal, also deserves my gratitude. He has read drafts of my thesis on two occasions and has readily answered almost any query I have had regarding theory, methods and the Universe in general. My fellow students at Sofie Lindstrøms Hus have provided a good environment for both learning and amusement. Thank you all. Lastly I would like to thank my girlfriend, Tonje Vollset, for her patience and support. Kristian Blindheim Bergen, June 2011 iv Contents: Tables: ..................................................................................................................................vii Figures:................................................................................................................................viii Chapter 1: Introduction......................................................................................1 1.1 Studying research ............................................................................................................. 3 1.2 Why study corruption? ..................................................................................................... 4 1.3 The structure and approach of this thesis ......................................................................... 6 Chapter 2: Corruption: what it is and how it may be explained....................9 2.1.1 Defining corruption....................................................................................................... 9 2.1.2 Types of corruption ..................................................................................................... 11 2.2 The scope of the study: seven dependent variables........................................................ 12 2.2.1 The effect of economic liberalization on corruption............................................... 14 2.2.2 The effect of democracy- versus autocracy on corruption...................................... 16 2.2.3 The effect of regime transitions on corruption........................................................ 18 2.2.4 The effect of strong versus weak democratic traditions.......................................... 20 2.2.5 The effect of media presence on corruption............................................................ 21 2.2.6 The effect of level of economic development on corruption .................................. 23 2.2.7 The resource curse................................................................................................... 25 2.3 Concluding remarks ....................................................................................................... 26 Chapter 3: Independent variables: data sources on corruption...................27 3.1 Qualitative versus quantitative methods ........................................................................ 28 3.2 Data and research on corruption..................................................................................... 31 3.2.1 Perceptions based measures .................................................................................... 31 3.2.2 Experience based measures..................................................................................... 34 3.2.3 Data sources available for country- and region-specific studies............................. 35 3.3 Measurement errors: formulating hypotheses ................................................................ 40 3.3.1 Possible classical measurement errors in corruption data....................................... 41 3.3.2 Possible divergence between experience based and perceptions based data .......... 45 3.3.3 Non-classical measurement error ............................................................................ 46 3.3.4 Possible divergence between experience based and perceptions based data .......... 48 3.4 Concluding remarks ....................................................................................................... 50 Chapter 4: Choices of methods and data for this thesis ................................52 4.1 The choice of a quantitative approach............................................................................ 52 v 4.2 Reviewing literature quantitatively ................................................................................ 53 4.3 Operationalizations of dependent and independent variables ........................................ 54 4.4 Binary logistic regression analysis................................................................................. 56 4.4.1 Interpretation ........................................................................................................... 58 4.4.2 Test statistics ........................................................................................................... 59 4.4.3 The assumptions of logistic regression. .................................................................. 60 4.5 Creating a sample:.......................................................................................................... 62 4.6 Concluding remarks ....................................................................................................... 64 Chapter 5: Analyses ..........................................................................................65 5.1.1 The effect of economic liberalization on corruption................................................... 65 5.1.2 The effect of democracy on corruption ....................................................................... 67 5.1.3 The effect of regime transition on corruption: ............................................................ 73 5.1.4 The effect of stronger democratic tradition on corruption .......................................... 74 5.1.5 The effect of presence of a free media on corruption.................................................. 77 5.1.6 The effects of level of economic development on corruption..................................... 80 5.1.7 The resource curse....................................................................................................... 83 5.2 Discussion of findings.................................................................................................... 86 6. Concluding remarks......................................................................................92 6.1 Summary of approach and findings ..............................................................................