What about corruption s dimension? A study case for a Colombian institution: an axiomatic approach proposal. 1 Cristian Piñeros Rodrigo Domínguez Economics as a discipline provides a comprehensive analytical environment for understanding complex systems, such as poverty, inequality, discrimination and social phenomena. A constant issue in ordinary citizens, lies in the origins of a particular phenomenon, which has an impact on many other social phenomena, and according to Hodgson and Shuxia (2007) is the main problem facing many societies, this problem is known as corruption. When the media in Colombia are analyzed; is possible see the different evidence of this scourge because of the scandals of this problem. Among the consequences, it may occur: loss of confidence in institutions, the loss of public resources, the decrease in the provision of public goods, among others. (Shleifer and Vishny, 1993). The high incidence of this phenomenon in Colombia had become to be a frequent topic of conversation in all circles and it is not wondering: the Corruption Perception Index, calculated by Transparency International in Colombia, remains high compared to other countries in the region, placing the country in 94th place among 177 countries on the list of the most corrupt 2. Obviously; this problem has attracted a lot of interest from academia to analyze some of its causes and propose solutions to this problem that affects both Colombians. From different fields such as political science, sociology and psychology it has tried to address this issue. In economics it has been no exception and authors as Shleifer and Vishny (1993) found different effects of corruption on market performance, among which are found that generate inefficiencies in resource allocation, and it becomes a developing countries limiting. Analyzing corruption from economic theory has also been useful for understanding the effects of the political cycle and the composition of the State in the performance of institutions to allocate its resources and has been helpful in making assessment on fiscal policy (Johnson, 2004). But, what is seen as corruption? This is where the definition of NGOs such as Transparency International, is hosted and used by entities such as the Organization for Economic Cooperation and Development (OECD): corruption is defined as the abuse of public power for private income, by granting permits and the provision of government services. Given this definition, there is already a context of corruption as an study object, and a couple of basic questions that must be taken in research on issues such as corruption. The first question is how we can theorize a versatile issue as corruption? This is an issue that differs culturally and legally in different countries and even different cultures. Heidenheimer et al (1990) noted that the word corruption, itself, has different connotations in different countries and cultures, as it can be a systemic event of institutions as can also be seen as abnormal and sporadic occurrence in other countries, limiting the 1 Paper presented in Political Economics of Institutions II: Applied Cases in VI IIPPE Conference, Leeds 2015. We acknowledge your invitation, we could not be in the presentation so we apologize, we hope this paper clears some of our recent work in Colombia to measure corruption, further technical papers will treat the methodology as an only Issue. We are Economics students in Universidad del Valle in Colombia. 2 http://www.eltiempo.com/archivo/documento/cms-13248516
comparative analysis between regions. Also the profits from such corruption may differ (Bayley, 1966; Werlin, 1973). This leads to a comprehensive review on the concept of corruption to understand its dynamics and get an idea of the dimension that this can have on the communities in which it operates. This dimension involves a second question: how to measure corruption in countries? Economists have encountered serious limitations to obtain information that aim keep track of corrupt acts, which has not allowed get a real dimension of the phenomenon and it takes to misapplication of public policies to purge the bureaucracy and reduce corruption (Seligson, 2006). Authors like Foster, Horowitz and Mendez (2009) argue that the measures used to measure corruption are based on perceptions and therefore tend to be subjective, which pose measurement biases that make these measurements inadequate for research purposes by the social scientists. Furthermore, these measures do not take quantifiable attributes about how corrupt they behave, making it difficult to identify the relationship between perceptions of corrupt acts and the different directions you can take corruption in time. The two questions should be addressed to implement successful in measuring corruption in any institution to be studied, for the Colombian case has been found that the design of anti-corruption policies 3, not part of an accurate identification of the problem of corruption that not take into account the dimension of the problem through proper measurement and as objective as possible that allows for accurate diagnosis and get more efficient policies. That is why you should bet on efficient measures to identify the problem in its full dimension in order to design policies to reduce real way, corruption and its effects on the markets. This proposal is to address the phenomenon from an axiomatic approach to obtain clear rules to establish and measure corruption rules and that these measures have some desired properties. So the application of Foster, Horowitz and Mendez (2009) in which a new approach is suggested to measure corruption is taken, and contrast with conventional methods. So the research question is given by: What is the most appropriate measure to quantify corruption in a given institution for a period of time? For this purpose we are going to get a corruption measure for Universidad del Valle in Colombia in a period of a year (2014-2015), in this paper we will explore some research about this concern and we propose a framework to get this measure. Why economists should care about dimension of corruption? The reasons why economists should evaluate problems such as corruption are two: One ethical, Mendoza, Montaner and Vargas Llosa (1998) said that behaviors such as corruption are well documented and its effects on the population are too large and numerous to quantify clearly. Given this, we must start by saying that cases of corruption in a country like Colombia are frequent news and that is the talk of all academic and social circles, so this has been reflected in a strong media agenda 4 but it has not been well reflected in a strong academic agenda that seeks solutions to the problem. Given that, the second reason why economists in a country like Colombia, must study corruption, is how occurs. We can study this issue because it is a multidimensional phenomenon that reflects many of the other problems facing the State for its legitimacy and it should be approached in a multidisciplinary 3 For example, in the Anticorruption Statute: http://www.contraloriagen.gov.co/documents/10136/49245504/cartilla-estatutoanticorrupcion.pdf/aa1f4544-3756-40be-9f3e-6cdbec1197ef 4 For example: http://www.eltiempo.com/noticias/corrupcion-en-colombia
way. As a fact, you can see the number of organizations of scholars from different disciplines to address and research corruption (Transparency for Colombia for example). These organizations have multidisciplinary teams that analyze not only issues of corruption and its measurement, but also discussed issues such as the behavior of the political and legal system, government structures, the size of government, efficiency of public spending, among others. This document is intended to be a contribution to diagnostics on specific phenomena of corruption, with effective measures where the losses are quantified in the public sector for better results when countries are able to implement standardized anti-corruption policies. The failure to have accurate measurements of corruption at hand, give us big challenges in terms of measurement and in terms of the procedures that can be taken on the matter 5, this due to the imprecise measures of corruption, it makes policies taken in this regard being vague and also citizens do not have a full awareness of where their public resources should go because they have certain references of where are their resources allocated (Transparencia por Colombia, 2009). So, the work should focus now on developing objective measures that serve as references for the entire community and enabling standardize several measures of corruption that may be obtained, to implement responses uniformly by the various institutions that are responsible for fighting corruption, this for the sake of a comprehensive solution. The famous speech by President Turbay (in Colombia) in the 80s on reducing corruption state to their right proportions, can be the perfect diagnosis of a society like Colombian addresses corruption and how this corruption is dealt with differently in different societies. So you can not study corruption as an exogenous phenomenon to cultural and social patterns of the country, since as noted by authors such as Heidenheimer et al (1990) and Egiegba (2011), corruption is a versatile matter as it has into account the social and structure of individuals and the history of the country and the region where it operates. That is why we must also analyze the institutional and social reasons about why corruption is incubated in the country, and this is another reason why economists can tackle a job like this, since the institutional characteristics of the country can help explain effects of markets such as weapons, drugs in state-building and how it was captured by them, among other things. The following section provides a brief review of literature that seeks to address the main documents on which this work is based, and linked to the Colombian case in order to induce the research question and frame it within the local context. Some are considered as a seminal work on the subject, as well as some case studies that can serve as a guide to address the problem like this. These are empirical papers that take both subjective measures of corruption, and develop some objective measures to quantify better corruption in public institutions. A very brief literature review. Leff (1964) presents a work that shows that in developing countries, the government has primary responsibility for economic growth, so the faults committed by officials also influence the way the State is modernized and efficient in its functions. And even it is noted that all sectors of society apparently do not like corruption, given certain structures of power and interests fall in the game to practice some behaviors considered as corrupt, although you can see some of the positive effects of corruption in the 5 http://www.transparenciacolombia.org.co/index.php?option=com_content&view=article&id=107&itemid= 536
political system, the author concludes that this has two negative microeconomic and macroeconomic effects, affecting efficiency from production to inflation. Bayley (1966) makes a theoretical analysis of the effects of corruption on developing countries, which shows that corruption can have positive effects on the economic development of the countries analyzed. To do this, he provides important theoretical elements as the study of the word corruption and pose the conditions under which corruption gives at the levels of government. He also speaks of the culture like a factor to tackling corruption, as in many of these countries is not seen as a regrettable but justified, and even audacious behavior so there is condemned socially and causes perceptions of the problem are lower than countries where such conduct if socially censored. The author points out both positive and negative effects of corruption; including the negative are the loss of efficiency and performance of the State to its core functions and loss of confidence in the institutions. Among the positive effects the author highlights in the fact that corruption reduces the cost of government decision-making and that resources are often used by those who steal to stimulate investment and consumption. The author concludes that more empirical work is needed to quantify these effects and develop new hypotheses about the effects of corruption on all levels of government. Shleifer and Vishny (1993) make a contribution to this discussion about the effects of corruption in the markets, they are based on assumptions such as Rose-Ackerman (1978), and make a detailed analysis of the effects of corruption in the markets. It is that corruption has a distorting effect on resource allocation in the markets and in the state allocation. Authors like Mauro (1995) unlike authors such as Bayley (1966), take that corruption if it induces low economic growth through loss of human capital, as talented people are assigned to jobs that are not sufficiently productive besides having detrimental to the State lead thefts given the low wages they receive for their productivity incentives. In addition to income derived from the State thefts are not translated into investment and consumption as indicated Bayley (1966). Mauro (1995) was the first in develop a series of empirical studies to measure the various effects of corruption on economic growth, in his work Corruption and Growth, Mauro shows that corruption negatively affects economic growth, and it takes the database with some subjective measures of corruption such as the amount of the theft to the State, the stability of the judicial system and the stability of the political system to a sample of countries. This work is based on discussions such as Leff (1964), Bayley (1966) and Shleifer and Vishny (1993) and seeks to contrast their theoretical arguments about the different effects that have been raised on growth. This article provides institutional analysis on issues such as corruption of authors such as Douglas North and denies all the evidence that corruption is good in a sense because it does not provide trading or does not increase the amount of investment as authors or had raised as Bayley (1966). Ades and Di Tella (1999) propose an empirical work in line Mauro (1995) and also to use their databases, use another database to study the cause of corruption for a sample of countries. They are based on the World Competitiveness Report (WCR) of the World Economic Forum and shows that competition is a factor that can be cause of corruption in countries; the authors start from the assumption Rose-Ackerman (1978) in the sense of that competition is a limiting factor for corruption. This paper provides a new way to develop databases about corruption, which remains based on subjective measures and the work of Mauro (1995). In this case it is concluded that competition is limiting corruption to the extent that incentives are lost by companies to capture the State, in this case the market prices play a determining factor since it is the how competing companies and given the
structure of consumer preferences, they do not react the way we expected in monopolies to changes induced by capturing the State prices. Kaufmann (1999) explores a model which is using aggregate indices, measuring corruption in an objective manner, for it uses an approach in which using the principal components method makes the aggregation of different subjective corruption rates, which are in surveys conducted, all for one sample of countries in which develops a composite index of corruption, which is given in confidence levels, the author concludes that further aggregation leads to objective measures of measuring corruption and that some countries have no significant differences with the current indicators which may indicate that the selection bias in the measurement is not so serious when it comes to quantifying the corruption problem. Di Tella and Savedoff (2002) present a compilation called Diagnosis Corruption: Fraud in Latin America's Public Hospitals, in this study they present the effort to compile the different ways in which data are collected to measure corruption in different parts of the world. Methodological work is in progress, is that has been measuring corruption through the years, as they have better conceptual elements to address how the problem arise. It is found that the main challenges are to find objective measures to avoid selection bias suffered by objective measures and for that present different ways to find objective ways. The authors use an item of particular study such as public hospitals in Latin America, the health sector had a public spending on average 8% of GDP for 1998 indicating that there are a lot of resources invested in the sector but still it has poor service, which can be an indicator of corruption. Case studies conclude that although there is still some way to go, there are important methodological advances in the search for objective data to measure corruption in public institutions. Giedion, Morales, and Acosta (2002) presented a case study for Bogotá and its network of public hospitals, the study is important because it presents a possibility find objective methods for measuring corruption in public institutions. The authors make an analysis of the Colombian health system and possible weaknesses that may have the district administration in managing the health sector. The authors established a method to study the impact of health system reforms (Law 100 of 1993) in the performance of public hospitals in Bogota. It was found that 60% of the supply of drugs was purchased with more money, than would have needed for other types of health administration, and though these reforms do not change the way hospitals are managed, if you have helped reduce embezzlement in the system under the methodology proposed by the authors. Foster, Horowitz and Méndez (2009) propose an axiomatic approach that can be adjusted to many of the subjective indicators used in measuring the corruption to a standard approach to obtain objective when measuring corruption measures in different sectors. The authors presume that there is a selection bias that prevents the accuracy of measurements of corruption because, they are subjective, also suggest that the effects of anti-corruption policies of these measures are evil because they are based on inaccurate calculations, which could these policies make little cost-effective addition to not directly attack the problem. To do this the authors propose a measurement methodology which subjective measures taken, axioms and some weights that allow subjective measures acquire a desired properties that are used to become objective. The authors take a sample of countries to implement the conversion of the measurement methodology proposed by Transparency International, where there are actual changes in the proportion of corruption, which concluded that subjective measures may overestimate or underestimate in some cases effects of corruption.
Egiegba (2011) provides a good framework and a comprehensive literature review to address the issue of corruption from three different perspectives: the theory economic, political science, and aspects such as sociology and anthropology. In his work he seeks to address the relationship between corruption and underdevelopment in the case of Nigeria, and is relevant theoretical aspects to be addressed before authors such as Bayley (1966) and Shleifer and Vishny (1993): corruption is multifaceted and depends from cultural and social factors, so there is no standard definition of corruption in all cases and needs for which it is studied may be different for each community in which the analysis is done. Since this is due to make a social and historical context to check what kind of analysis is developed territory. From political science it is heavily influenced by theories such as elites and also the importance of the political cycle and the structure of institutions in influencing corruption. The author concludes that corruption is strongly linked with underdevelopment in the countries and found that only strengthening institutions can fight corruption. As seen in this brief literature review certain key issues to be addressed in the research process is induced, the first is to measure and get the main effects of corruption in the society in which we live so there to make a diagnosis of how Colombian society tackles corruption and what he has done historically to combat it. The second problem is theoretical, what is corruption itself to the context in which it is and how it is measured, and finally the methodological advantages of analyzing different methods corruption measures analyzed for which a subjective measures are taken and objective to ensure better results in obtaining results of policy measures are proposed. What is our hypothesis? Given the issues raised above are two basic elements that define the problem of corruption. The first is the versatility that presents this phenomenon in different societies and cultures that makes depending on the social context in which it is found, this will be absorbed differently by implying that the punishments are different for each judicial system. The second is about the consequences economic phenomenon that can bring in different societies, such as from the loss of public resources to the underdevelopment same (Egiegba, 2011). That is why the measurement of this phenomenon requires particular items to take account of particular factors for each society in which this phenomenon unfolds. These particular factors were taken into account and recognized international measurements such as Transparency International as part of this work, the authors hypothesized as Foster, Horowitz and Mendez (2009) in which it is stated that these measurements suffer from bias selection derived from the subjectivity of the indicators used to measure corruption in a particular environment. This bias current causes corruption indicators are overstating or understating the problem of corruption in a particular environment, so the creation of objective measures to end this problem and give more precise estimates of corruption in a particular institution. These measures contribute to efficient implementation of anti-corruption policies. Now, How we will do it? Where are we going? In this paper the methodology proposed by Foster, Horowitz and Mendez (2009) which is based on an axiomatic approach to measurement used part of poverty measurements made in the work of Sen (1976, 1983). This methodology has two components, component identification, and other aggregation. Like measurements from Sen, poverty is to first determine who is poor and then add them and thus a
measure of poverty is identified, in this case what you do is first identify criteria valid identification of the phenomenon of corruption then add and build an indicator to ag watering the various sources of corruption in an institution or individual shows. The stages of identification and aggregation are different for measuring corruption for measuring poverty, because of the nature of the individuals involved in the analysis, for example. With poverty, we have an individual who identifies as poor is because their interactions in the market, but in corruption, no transactions involving more than one counterparty. So in the literature (Vishny, 1993 for example) figures bribe takers (Those who receive bribes) are used, this figure is given by public officials who receive payments as consideration for services involving public permits transactions this type are taken into account in the analysis of Foster, Horowitz and Méndez (2009). In the particular case, can be analyzed in transactions involving the use of public services by citizens in the provisions that contracts with private agents involved. A significant difference of this approach, with a focus on poverty measurement Sen is in identifying the gaps between the estimated corruption (by subjective indicators) and corruption seen from the objective indicators. Because individuals who commit acts of corruption but fail for various reasons in its objective can be characterized as corrupt, which is not about the poor, obviously no one tries to be poor, and if it does not fail in the attempt. So in this study only takes into account the actual cases of corruption and these are what is identified as corrupt acts. Ideally criminalize all acts of corruption to a fuller extent, but data limitations prevent corruption track failed. Individuals in the analysis are classified between officers and clients. Officers are defined as public servants serving on which are assigned to grant permits or executing public punishment derived from the current legislative system failures. Or those who are allowed to trade goods and services from the state or government allocate resources in different projects. As these customers are defined as private agents leading businesses or those used state services are provided directly or indirectly. As for the identification stage, this is in more objective terms that the criteria under which poverty, for example, poverty is identified certain subjective criteria used by the researcher in which a poverty line is delineated or entry. As for corruption it must be the corrupt act, is determined by its illegality regardless of the amount that is stolen. For this you should review existing legislation to identify the corrupt acts considered by the law and from there to draw up the list of corrupt acts identified in the sample taken is. This review of current legislation is shown that corruption is a social construction that acceptance or not depends on the customs and norms of the communities where this it operates. It is from there that also must build some tolerance levels depending on the amount of transactions carried out. Certain average amounts for which it is considered that certain transaction, can be regarded as corrupt, depending on the amount of such market products that are provided, or the income of employers or officials involved in the analysis are also built (this according to data availability). You can also build tolerance values and criteria for corruption is the result of extortion that does not involve a direct transaction of government services. Regarding the aggregation stage must be all instances obtained from construction tolerances and typing of transactions can take a view of how to build an aggregate level of corruption C, which depends on the data in an identification matrix D (defined by the authors as well) and the tolerance criteria defined in a vector Z.
As for corruption it must be the corrupt act is determined by its illegality regardless of the amount that is stolen. This requires reviewing existing legislation to identify the corrupt acts considered by the law and from there to draw up the list of corrupt acts identified in the sample taken is. This review of current legislation is shown that corruption is a social construction that acceptance or not depends on the customs and norms of the communities where it operates. It is from there that also must build some tolerance levels depending on the amount of transactions carried out. It is from there that comes a new stage of analysis methodology that comes in the definition of the institutional context in which the analysis is applied. Thus we suggest taking the public institution to be analyzed and a characterization of several elements to develop hypotheses about the possibilities of implementation of corrupt acts: in a first step, the institutional climate, ie a revision of the law in which is observed which is also the internal cohesion and what are the synergies between the various departments in budget allocations are. In our own case we chose the Universidad del Valle in Colombia not only because it was our case for closer study and greater availability of data but also because it has special features that allow a wider analysis from a political point of view that can give new elements to engage in corrupt acts typing. The University is protected under the constitutional principle of university autonomy, which makes public universities in Colombia have own governments and regulating their own operation from a regulatory framework: Law 30 of 1992. This law is a consequence of the consolidation of neoliberalism as a model of economic development in Colombia that generates tensions around the way in which budgets are allocated and the missionary functions of each of the public bodies are established, which led in the following years the issuance of this law to the proliferation of private institutions of higher education but also to a progressive defunding the state educational system that somehow did more algid internal discussions about college assignments, which generated large budget restrictions which resulted in the detriment of academic quality and academic welfare. So that one of our hypothesis is the possibility that this de-funding has generated pressure groups who want to capture the different units of spending to allocate budgets to the preference of these groups. There is also the possibility that university officials take advantage of the situation resulting from this political tension to also capture own resources. In this sense, the analysis also leads to the possibility of analyzing the external institutional environment to college from budget allocation in the regulatory framework. Another proposal brought from the consolidation of neoliberalism in Colombia is given by fiscal decentralization, decentralization delegated this responsibility to several spending units (national and departmental) on the financing of public universities. It is in this sense that the possibility of diverting resources come in pre-budget allocation in the institution stages, such as the capture of spending units within the institution is given by external officials to the University (Political) or private operators (suppliers) seeking achieving own incomes. To do an analysis of the regulatory framework and contract schemes at the University is made. In general terms it is that the university as a public entity governed by the general public procurement law (Law 80 of 1993) and as such is limited to the contracting schemes. In that sense it is identified that the university is autonomous to define the times that makes and defines its tender (either open or closed). That is roughly in the University define absolutely all use of their budget according to the areas designated by law for various forms of spending. So it is that the factors that affect the use of the budget are internal and therefore can analyze the way in which budgets holistically are assigned to identify acts of corruption that may be happening within the budget allocation.
A second step is to identify the elements in the law that are effective and items that are not. In Colombia the various institutional frictions make the law as a means of coercion is not sufficient to guarantee fundamental rights, collective agreements or regulatory mechanisms. The next step is to make a survey for members of every level at the University, this survey has a objective data panel and another panel of perception, we hope share you this methodology in a more technical paper soon, so the next year in Lisbon show you how this work has advanced, we are trying to fight corruption since academia trying to describe it a his best. We want to thank Leeds University and IIPPE for this invitation and we hope to get your work as an inspiration to change status quo in a neoclassical world. References. Ades, A y R. Di Tella. Rents Competition and Corruption. American Economic Review. 89, pags. 982-94 Bayley, D. H. (1966). The effects of corruption in a developing nation. The Western Political Quarterly, 19(4), 719 732 Di Tella, R y Savedoff W. Shining Light in Dark Corners. En Di Tella, R y Savedoff, W (Compiladores): Diagnosis Corruption: Fraud in Latin America s Hospitals, cáp 1. Interamerican Development Bank, Washington. Egiegba Agbiboa, (2011) Between Corruption and Development: The Political Economy of State Robbery in Nigeria, Cambridge University Press. Foster, J; Horowitz, Andrew y Fabio Méndez (2009) An Axiomatic Approach to the Measurement of Corruption:Theory and Applications. Arkansas University. Giedion, Morales y Acosta (2002): The Impact of Health Reforms on Irregularities in Bogota Hospitals. En Di Tella, R y Savedoff, W (Compiladores): Diagnosis Corruption: Fraud in Latin America s Hospitals, cáp 6. Inter-american Development Bank, Washington. Heidenheimer, A. J., Johnston, M., & Le Vine, V. T. (1990). Introduction. En A. J. Heidenheimer, M. Johnston, & V. T. LeVine (Eds.), Political corruption: A handbook (pp. 165 171).New Brunswick, NJ: Transaction Publishers. Hodgson, Geoffrey y Shuxia, Jiang (2007): The Economics of Corruption and the Corruption of Economics: An Institutionalist Perspective, Journal of Economic Issues, Vol. 41, No. 4, pp. 1043-1061 Johnson, R. A. (2004). The struggle against corruption: A comparative study. New York: Palgrave Macmillan. Kaufmann, D; Kraay, A y P. Zoido (1999): Aggregating Governance Indicators. Policy Research Working Paper 2254. World Bank: Washington, D.C. Leff, N (1964) Economic Development Through Bureaucratic Corruption, American Behavioral Scientist Vol. 8, Pág 8-14, Sage Publications, USA.
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