Big Government, Big Corruption? Examining the Relationship between Government Size and Public Corruption in the Philippines

ABSTRACT

Unlike corruption, government size has not been studied in the Philippines despite numerous literature suggesting relationship between the two. This study fills that gap by looking at state spending and how it relates to the enduring political issue of public corruption. Findings suggest that, contrary to expectations, bigger disbursements actually improve public’s perception of bureaucratic corruption, similar to the effect of better institutions and rule of law.

Keywords:

• Corruption
• government size
• the Philippines
• vector autoregression

Notes

^1. From a budget deficit of over 5% of GDP during the Estrada administration, Mariano (2016) reported that the budget gap fell to only 0.9% of GDP in 2015, way below 2% target for the year.

^2. Some descriptions here came from the author’s master’s thesis titled Determining the Lag Effects of Corruption, Business Environment and Economic Growth on FDI: A Case Study of the Philippines. (Magtulis, 2015). The thesis is available at http://library.catholic.ac.kr.

^3. “UNODC Statistics,” United Nations Office on Drugs and Crime, accessed 21 December 2015, https://data.unodc.org/?lf=1&lng=en.

^4. “Corruption Perceptions Index,” Transparency International, accessed 21 December 2015, http://www.transparency.org/research/cpi/overview.

^5. Kotera et al. (2010) also suggested the use of an index for democracy as an explanatory variable for corruption; however, the researchers were not able to identify an index for the Philippines that would be appropriate for the purposes of this study.

^6. Sources included corruption measurements from the Economist Intelligence Unit Riskware, Asian Development Bank country policy and institutional assessments, World Economic Forum Global Competitiveness Report, Freedom House, Global Integrity Index, Political Risk Services International Country Risk Guide, and World Justice Project Rule of Law Index.