Does Democracy Have a Different Impact on Corruption in Africa?

Abstract

The author investigates the relationship between corruption and the newer proxies of democracy for African countries. The regression results suggest that countries that are relatively more democratic are also less corrupt. Of the different aspects of democracy examined, the functioning of government and political participation are found to be significantly correlated with corruption. The estimates suggest that countries with functioning and efficient governments and healthy political competition are less corrupt. Unlike the early empirical studies, the evidence of a nonlinear relationship between corruption and the new proxies of democracy is weak, especially after controlling for other factors and correcting for the endogeneity problem. Our results suggest that ethnolinguistic fractionalization and the level of development are also important determinants of the level of corruption in Africa.

Key words:

• Africa
• corruption
• democracy

Acknowledgments

I am grateful to two anonymous referees for valuable comments on the earlier drafts of the paper. The views expressed here are mine and I take responsibility for any errors.

Notes

Note. Figures in parentheses are t ratios. Dependent variable = corruption perception index.

***, **, and * indicate the level of significance at 1%, 5%, and 10%, respectively.

Note. Figures in parentheses are t ratios.

Dependent variable = corruption perception index.

***, **, and * indicate the level of significance at 1%, 5%, and 10%, respectively.

Note. Figures in parentheses are t ratios.

Dependent variable = corruption perception index.

***, **, and * indicate the level of significance at 1%, 5%, and 10%, respectively.

Note. Total sample of observations is 42 for 2006 and 46 for 2008 and 2010.

These countries include Botswana, Cape Verde, Mauritius, and Rwanda with CPI scores of 6.1, 5.5, 5.1, and 5.0, respectively. In 2010, only Botswana, Cape Verde, and Mauritius scored above the 5 mark. The CPI score ranges from 1 to 10, with 1 indicating highly corrupt and 10 indicating highly clean (or less corrupt).

Democracy is defined narrowly here as political or civil rights. In fact, Ades and Di Tella find that the lack of democracy seems to be associated with less corruption.

More accurately, the c(x) is the expected cost function and b(y) is the expected benefit function. The x and y are sets of factors that determine the expected costs and benefits, respectively. Some members of x and y may be similar or related.

Others include social, psychological, and financial costs.

Data on the instruments ware obtained from the International Monetary Fund's African Development Indicators Database (December, 2012).

The threshold levels of democracy are computed from the first order condition of the estimated corruption function with respect to democracy—i.e., 2β₉(Demo) = –β₈.

An investigation of nonlinearity involving ethnolinguistic fractionalization as suggested by Cerqueti, Coppier, & Piga (2012) did not yield significant estimates in the case of Africa.