A new study in Public Administration Review, “The Impact of Public Officials’ Corruption on the Size and Allocation of U.S. State Spending,” looks at the impact of government corruption on states’ expenditures. Defining corruption as the “misuse of public office for private gain,” the authors of the paper note that public and private corruption can have a range of negative effects, including lower-quality work, reduced economic productivity, and increased poverty.
According to Leighton Walter Kille, the researchers explored two possible theories: First, higher levels of corruption should cause states’ spending levels to be higher than they would be otherwise. Second, corruption would distort states’ spending priorities in ways that favor bribes from private firms and others. Some of the findings include:
• Corruption and elevated state expenditures were found to be positively correlated. Over the period studied, if the 10 most corrupt states had been at the average level of corruption, they could have reduced their annual expenditures by $1,308 per capita, or 5.2% of the mean per-capita expenditure.
• More-corrupt states tend to spend more on areas that are fertile ground for practices most conducive to corrupt practices such as bribery, kickbacks, extortion, nepotism and patronage. These include construction and highway projects, salaries and wages, borrowing, correction and police protection.
• Construction projects find particular favor because they present a wealth of corruption opportunities: “First, construction involves large, complex, nonstandard activities, so the quality of construction can be very hard to assess. Second, domestic and international construction industries are dominated by a few monopolistic firms. Third, the industry is closely linked to the government. Governments have major roles as ‘clients, regulators, and owners’ of construction companies. It is very common to bribe government officials to gain or alter contracts and to circumvent regulations related to construction.”
According to the study, the top 10 most corrupt states are:
- South Dakota
“The results of this article suggest that preventing public officials’ corruption and restraining spending induced by public corruption should accompany other efforts at fiscal constraint,” the researchers conclude. “Increases in states’ expenditures on capital, construction, highways and borrowing are not problematic in themselves. . . . However, policy makers should pay close attention that public resources are not used for private gains of the few but rather distributed effectively and fairly.”