Corruption and Infrastructure at the Country and Regional Level

This paper examines the relationship between corruption and infrastructure at both the country and regional level using the World Bank's Enterprise Surveys data. A statistically significant and considerable relationship is established between the measure of corruption in the macro data and the measures of transportation and electricity infrastructure. Countries with more corruption tend to have worse infrastructure. At the regional level, the key result is unchanged. The magnitude and significance of this result is shown to vary by global region. Two stage least squares results, using distance from the equator as an instrument at the macro level support the simple Ordinary Least Squares (OLS). Finally, it is shown that within-country variation in corruption has a significant effect on regional infrastructure.