Crime, Corruption and Development

University dissertation from Uppsala : Department of Economics, Uppsala University

Abstract: Essay I: Prosecuting and convicting corrupt officials is a common strategy to combat corruption. Despite this, little is known about the effectiveness of such anti-corruption policies. Theoretically it has been argued that convictions might not achieve much in a highly corrupt environment, since incentives are likely to favor persistence of corrupt behavior. This study investigates the causal effect of convicting corrupt local officials by exploiting exogenous variation in the probability of conviction caused by the random assignment of cases to differently strict justices in the Philippines. Results show that convictions affect both who the local leaders are and the policy choices they make. In particular, families lose their monopoly power over the local government and spending is re-directed from general administrative items (e.g. mayoral office) towards public goods provision. In the long run, this leads to fewer corruption cases and a suggestive improvement of governance. An investigation of the mechanism proposes that the information provided by convictions is important in the political process. This illustrates the complimentary role that political and judiciary institutions can have in the fight against corruption.Essay II (with Jonas Poulsen and Anja Tolonen): The role of extractive industries for development is highly debated. A large literature focusing on poor countries with weak institutions has shown that such industries can spur conflict and war by providing appropriable resources. This study investigates whether this relationship persists later in the development process. More specifically, we examine whether the extensive mining industry in South Africa affects local property and violent crime. To estimate the causal effect, our empirical strategy exploits local production changes caused by fluctuations in international mineral prices. In contrast to earlier studies, we find that an increase in mining activity lowers the local crime rate. Several tests suggest that this effect is driven by better income opportunities, affecting the opportunity cost of engaging in criminal activity. In order for this effect to materialize, local institutional quality needs to be sufficiently high. If such conditions are met, the appropriation channel emphasized in the earlier literature is dominated by the change in opportunity costs of crime. Essay III: The effect of climatic variation on conflict and crime is well established, but less is known about the mechanism through which this effect operates. This study contributes to the literature by exploiting a new source of exogenous variation in climate to study the effect of fishermen's income opportunities on sea piracy. Using satellite data to construct a monthly measure of local fishing conditions it is found that better income opportunities reduce piracy. A wide range of approaches are employed to ensure that these effects are driven by income opportunities rather than other mechanisms through which climate could affect piracy.

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