The idea that corruption has negative effects on investment and growth has been in the development economics literature for quite a while.
Some believe that the real problems lie on institutional and political structures and that the focus should be placed in reforming them.
Others think that corruption cannot be solved if poverty and exclusion are not addressed.
A problem with both of these views is that they have little to say on how to ensure that, for example, education funds for primary schools effectively reach the kids and not get diverted massively along the way. Simpler solutions based on rigorous evidence and information might hold the key.
Let’s see three examples.
In 2003, the Brazilian government initiated random audits on municipal government use of federal funds, particularly in health and education. Three times a year, a lottery on which municipalities get an audit is broadcast publicly and a few days later a group of auditors descends on the randomly chosen municipalities.
Recent studies by researchers at the Pontificia Universidade Catolica Do Rio de Janeiro show that corruption affects the quality of education and significantly reduces the performance of primary school students.
Quoting its authors, “Students residing in municipalities where corruption in education was detected, score less on standardized tests, and have significantly higher dropout and failure rates.” Having less corruption seems to have more impact than having access to remedial education, or giving teachers bonus payments.
In the late 1990s, the Ugandan government sponsored a newspaper campaign to provide information on local school funding in order to boost parents’ ability to monitor local officials’ handling of a large school-grant program.
The information campaign increased the percentage of funds that effectively reached the schools from 20 percent to 80 percent. And the closer the schools were to news outlets, the stronger the effect. Embezzling funds is clearly easier if no one is watching.
One of the critical factors in student’s scores is teacher’s attendance. If teachers don’t teach, students do not learn. Who would have thought that providing students with cameras would increase teacher’s attendance?
It turns out that providing students with cheap cameras can increase teachers attendance from 21% to 44% and that children with cameras at hand were 62% more likely to transfer to a formal primary school.