Does Democracy Curb Corruption?
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Policy Economics Feb 1, 2016

Does Democ­ra­cy Curb Corruption?

A clever study inves­ti­gates the link between where roads are built and who is in power.

democracy and economic growth: Kenya's roads

Yevgenia Nayberg

Based on the research of

Robin Burgess

Remi Jedwab

Edward Miguel

Ameet Morjaria

Gerard Padró i Miquel

There’s an old Kenyan joke about the nation’s roads, which were often built in odd and irra­tional places and seemed to have lit­tle use for actu­al transportation.

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The joke was that we are so wealthy that these roads are being built to dry our wet clothes,” said Ameet Mor­jaria, assis­tant pro­fes­sor of man­age­r­i­al eco­nom­ics and deci­sion sci­ences at the Kel­logg School.

Mor­jaria grew up in Tan­za­nia and went to board­ing school in Kenya. That joke from his youth helped to inspire his recent research. In it, he uses the country’s hap­haz­ard road net­work to inves­ti­gate the impact of democ­ra­cy on the unequal dis­tri­b­u­tion of pub­lic resources. In par­tic­u­lar, he want­ed to know whether the sys­tem for fund­ing and build­ing roads became less cor­rupt and biased toward cer­tain groups of peo­ple — and thus the place­ment of roads became more dri­ven by eco­nom­ic rea­sons —dur­ing peri­ods of democracy.

There are five major eth­nic groups in Kenya, which British colo­nial author­i­ties large­ly seg­re­gat­ed into dif­fer­ent admin­is­tra­tive dis­tricts. After gain­ing inde­pen­dence from Great Britain in the ear­ly 1960s, Kenya has expe­ri­enced alter­nat­ing peri­ods of autoc­ra­cy (author­i­tar­i­an rule) and democ­ra­cy. Under autoc­ra­cy, the researchers won­dered, did Kenya’s pres­i­dent engage in eth­nic favoritism,” favor­ing dis­tricts dom­i­nat­ed by his own eth­nic group by giv­ing them more roads?

If you look at a road map of Kenya from the late 1980s, you lit­er­al­ly see roads going nowhere.”

Mor­jaria and his coau­thors report that the form of gov­ern­ment did make a dif­fer­ence — indeed, a dra­mat­ic difference.

If you look at a road map of Kenya from the late 1980s, you lit­er­al­ly see roads going nowhere,” says Mor­jaria, who used to pore over such maps as a child. There’s no eco­nom­ic devel­op­ment and lim­it­ed pop­u­la­tion in those areas.”

Dur­ing the years of autoc­ra­cy — from late 1969 to late 1992 — dis­tricts that were coeth­nic” with the pres­i­dent, mean­ing they shared his eth­nic­i­ty, received three times more invest­ment in road-build­ing projects than their pop­u­la­tion share would deserve. And the length of the roads built in those dis­tricts was more than five times their pre­dict­ed share.

But remark­ably, those imbal­ances almost com­plete­ly dis­ap­peared dur­ing the two peri­ods of democ­ra­cy — 1963 to 1969 and 1993 to 2011.

Democ­ra­cy and Eco­nom­ic Growth

For much of the last half cen­tu­ry, Kenya and oth­er African coun­tries have had flat or neg­a­tive eco­nom­ic growth.

Africa was basi­cal­ly what they call a growth tragedy,” Mor­jaria says.

Schol­ars often point to eth­nic favoritism as a key fac­tor in Africa’s growth tragedy, since cor­rup­tion mis­al­lo­cates resources and can sti­fle pro­duc­tiv­i­ty. If favoritism is curbed dur­ing democ­ra­cy, then that could be help­ing to fuel eco­nom­ic devel­op­ment dur­ing those periods.

In the imme­di­ate wake of Kenya’s inde­pen­dence, a demo­c­ra­t­ic gov­ern­ment came to pow­er, and the econ­o­my grew at a strong pace through­out the 1960s. By 1970, GDP per capi­ta growth was about 6 percent.

But in Decem­ber 1969, an auto­crat­ic gov­ern­ment assumed pow­er, and GDP per capi­ta growth declined sharply for the fol­low­ing two decades. You have a peri­od of dark­ness in the 1970s and 80s and the ear­ly 90s, when growth was basi­cal­ly in neg­a­tive ter­ri­to­ry,” says Morjaria.

After democ­ra­cy returned to Kenya in 1992, the country’s econ­o­my began to rebound. GDP rose grad­u­al­ly, hov­er­ing around 2 per­cent from the mid-2000s through the end of the decade. Much of sub-Saha­ran Africa fol­lowed a sim­i­lar pat­tern of eco­nom­ic growth and stag­na­tion through these decades as their gov­ern­ments alter­nat­ed between autoc­ra­cy and democ­ra­cy. Since the mid-1990s, both eco­nom­ic growth and the num­ber of democ­ra­cies in Africa have grad­u­al­ly increased.

While the rela­tion­ship between type of gov­ern­ment and eco­nom­ic growth seems appar­ent anec­do­tal­ly, hard data has not been easy to come by. Nor has it been easy to find direct evi­dence of the role of eth­nic favoritism in these cycles. So Mor­jaria, along with Robin Burgess and Ger­ard Padró i Miquel of the Lon­don School of Eco­nom­ics, Remi Jed­wab of George Wash­ing­ton Uni­ver­si­ty, and Edward Miguel of the Uni­ver­si­ty of Cal­i­for­nia-Berke­ley, turned to roads.

Part of the rea­son this research is dif­fi­cult to tack­le is that you need three key, but elu­sive, ele­ments in place. You need reli­able data that show where resources are going, which can be hard to come by in the devel­op­ing world; you need to study a place that has seen changes in who con­trols the gov­ern­ment, which can be dif­fi­cult in parts of the world where those in pow­er can become entrenched; and you need a polit­i­cal sys­tem that changes as those in pow­er change.

Kenya pro­vides an inter­est­ing lab to take on all these challenges.

Why Kenyan Roads?

African insti­tu­tions that keep reli­able records on pub­lic expen­di­ture are rel­a­tive­ly scarce. But the researchers came up with two inno­vate ways to tack­le this issue in Kenya. There are his­tor­i­cal road maps, cre­at­ed peri­od­i­cal­ly by the Miche­lin tire com­pa­ny, which show the growth of the road sys­tem through time. The researchers obtained and dig­i­tized these. They also obtained records of gov­ern­ment expen­di­tures on road projects. More­over, roads are the sin­gle largest source of pub­lic expen­di­ture invest­ment in Kenya — larg­er than health and edu­ca­tion combined.

And unlike most oth­er pub­lic projects in the coun­try, roads are fund­ed almost entire­ly by the cen­tral gov­ern­ment — a fact that gives the office-bear­er a great deal of influ­ence over where they are built.

Roads occu­py a large per­cent­age of the devel­op­ment bud­get each year,” Mor­jaria said. They’re vis­i­ble. They link peo­ple and places and access to mar­kets. So they are a good lab­o­ra­to­ry” to look at whether democ­ra­cy curbs cor­rup­tion, thus per­haps boost­ing eco­nom­ic growth.

Mea­sur­ing the Real vs. Ideal

In their study, the researchers cre­at­ed their own hypo­thet­i­cal, eco­nom­i­cal­ly ide­al Kenyan road net­work for a near­ly 40-year period.

They con­struct­ed this hypo­thet­i­cal road net­work by rank­ing the mar­ket poten­tial” of new roads con­nect­ing all 49 major urban areas that exist­ed in Kenya (or just beyond its bor­ders) in 1962. The mar­ket poten­tial” met­ric takes into account the pop­u­la­tion of urban cen­ters and the dis­tance between them.

The researchers deter­mined the total length of new roads that had actu­al­ly been built between the cre­ation of one Miche­lin map and the next. Then they built their hypo­thet­i­cal net­work by insert­ing roads accord­ing to their rank­ing of mar­ket poten­tial, stop­ping when they reached the total length of real roads built in that peri­od. They repeat­ed this process for each Miche­lin map that was pub­lished, rough­ly one every three years, through 2002.

Dur­ing the decade of democ­ra­cy between 1992 and 2002, accord­ing to the researchers, the two road sys­tems — actu­al and hypo­thet­i­cal — look very sim­i­lar. They look much less sim­i­lar dur­ing auto­crat­ic periods.

In par­tic­u­lar, roads built dur­ing democ­ra­cy con­nect­ed the nation’s cap­i­tal, Nairo­bi, and oth­er major urban cen­ters to a wider range of towns and cities, includ­ing many that are in dis­tricts that nev­er share the eth­nic­i­ty of the pres­i­dent,” Mor­jaria says.

Over­all, from 1963 to 2011, dis­tricts coeth­nic with the pres­i­dent received twice as many road expen­di­tures than their pop­u­la­tion share would pre­dict. But this tilt toward coeth­nic dis­tricts was almost entire­ly a result of invest­ment dur­ing auto­crat­ic peri­ods, when these dis­tricts received three times their pre­dict­ed share of road expenditures.

The Road Ahead

The pow­er of democ­ra­cy to pre­vent cor­rup­tion — and per­haps spur eco­nom­ic growth — is good news for African economies broad­ly, because the trend on the con­ti­nent is toward demo­c­ra­t­ic gov­ern­ments. The next step for the researchers will be to extend the same sort of analy­sis they have done in Kenya to the rest of Africa. If Kenya is a rep­re­sen­ta­tive case, then even imper­fect democ­ra­cies deter cronyism.

We’re not talk­ing about any­thing very sophis­ti­cat­ed when it comes to the polit­i­cal insti­tu­tions,” Mor­jaria said. We’re sim­ply talk­ing about the abil­i­ty for peo­ple to go and vote, with the option to vote for more than one party.”

If there is democ­ra­cy, maybe the effects of eth­nic­i­ty can be mut­ed, because you have bet­ter checks and bal­ances on lead­ers,” he says.

For exam­ple, the researchers note that the decline of eth­nic bias in road spend­ing in Kenya under democ­ra­cy can be attrib­uted, in part, to the fact that report­ing on road con­struc­tion in the nation’s two largest inde­pen­dent dai­ly news­pa­pers increased sub­stan­tial­ly after democ­ra­cy returned in Decem­ber 1992.

The democ­ra­cy effect kind of con­strains these guys from favor­ing their own peo­ple,” Mor­jaria says, sim­ply by hav­ing the pos­si­bil­i­ty, albeit a small one, of being kicked out of office.”

Featured Faculty

Ameet Morjaria

Assistant Professor of Managerial Economics & Decision Sciences

About the Writer

Theo Anderson is a writer and editor who lives in Chicago.

About the Research

Burgess, Robin, Remi Jedwab, Edward Miguel, Ameet Morjaria, and Gerard Padró i Miquel. 2015. “The Value of Democracy: Evidence from Road Building in Kenya.” American Economic Review. 105(6): 1817–51.

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