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Numerous countries are introducing citizen feedback schemes to tame corruption. We study how best to incorporate feedback in public officials' incentives. The main novelty of our proposal is to allow citizens to directly influence officials' pay. We consider a situation in which entrepreneurs must comply with regulation before undertaking a risky activity. Officials verify compliance to determine whether to grant permits, and may engage in either bribery or extortion. Without feedback, the government has no choice but to tolerate bribery, which leads to too many permits being granted and large negative externalities. By contrast, implementing a feedback scheme that (i) rewards entrepreneurs filing complaints and (ii) ties officials' pay to these complaints makes deterring both bribery and extortion possible. Our proposed scheme does not require the government to be able to verify the accuracy of complaints. In an extension, we incorporate the role played by intermediaries, and show their involvement makes the feedback scheme even more valuable.

This paper addresses the issue of favoritism at the design stage of complex procurement auctions. A local community of citizens wants to procure a complex good or project and lacks the ability to translate its preferences into operational technical specifications. This task is delegated to a public officer who may collude with one of the firms at the design stage of the procurement auction in exchange of a bribe. Assuming that it is prohibitively costly to provide a justification for many aspects, we investigate two simple accountability mechanisms that ask the public officer to justify one aspect of the project, with the threat of being punished if he fails: a random challenge mechanism and an alert-based mechanism that requires justifying one aspect on which the rivals of the winning contractor send a red ag. Relying on losing contractors enables the community to deter favoritism significantly more easily than the random challenge procedure as it allows to use information that is shared by potential contractors in the industry. The level of penalty needed to fully deter corruption is lower, independent of the complexity of the project and depends on the degree of differentiation within the industry. Below this threshold, favoritism occurs in some states of nature and we characterize and compare the different equilibrium patterns of corruption under both mechanisms.A more elaborate example suggests that the alert-based mechanism tends to lead to more standard specifications of projects.

This paper addresses the issue of favoritism at the design stage of complex procurement auctions. A local community of citizens wants to procure a complex good or project and lacks the ability to translate its preferences into operational technical specifications. This task is delegated to a public officer who may collude with one of the firms at the design stage of the procurement auction in exchange of a bribe. Assuming that it is prohibitively costly to provide a justification for many aspects, we investigate two simple accountability mechanisms that ask the public officer to justify one aspect of the project, with the threat of being punished if he fails: a random challenge mechanism and an alert-based mechanism that requires justifying one aspect on which the rivals of the winning contractor send a red ag. Relying on losing contractors enables the community to deter favoritism significantly more easily than the random challenge procedure as it allows to use information that is shared by potential contractors in the industry. The level of penalty needed to fully deter corruption is lower, independent of the complexity of the project and depends on the degree of differentiation within the industry. Below this threshold, favoritism occurs in some states of nature and we characterize and compare the different equilibrium patterns of corruption under both mechanisms.A more elaborate example suggests that the alert-based mechanism tends to lead to more standard specifications of projects.

This paper addresses the issue of favoritism at the design stage of complex procurement auctions. A local community of citizens wants to procure a complex good or project and lacks the ability to translate its preferences into operational technical specifications. This task is delegated to a public officer who may collude with one of the firms at the design stage of the procurement auction in exchange of a bribe. Assuming that it is prohibitively costly to provide a justification for many aspects, we investigate two simple accountability mechanisms that ask the public officer to justify one aspect of the project, with the threat of being punished if he fails: a random challenge mechanism and an alert-based mechanism that requires justifying one aspect on which the rivals of the winning contractor send a red ag. Relying on losing contractors enables the community to deter favoritism significantly more easily than the random challenge procedure as it allows to use information that is shared by potential contractors in the industry. The level of penalty needed to fully deter corruption is lower, independent of the complexity of the project and depends on the degree of differentiation within the industry. Below this threshold, favoritism occurs in some states of nature and we characterize and compare the different equilibrium patterns of corruption under both mechanisms.A more elaborate example suggests that the alert-based mechanism tends to lead to more standard specifications of projects.

This paper addresses the issue of favoritism at the design stage of complex procurement auctions. A local community of citizens wants to procure a complex good or project and lacks the ability to translate its preferences into operational technical specifications. This task is delegated to a public officer who may collude with one of the firms at the design stage of the procurement auction in exchange of a bribe. Assuming that it is prohibitively costly to provide a justification for many aspects, we investigate two simple accountability mechanisms that ask the public officer to justify one aspect of the project, with the threat of being punished if he fails: a random challenge mechanism and an alert-based mechanism that requires justifying one aspect on which the rivals of the winning contractor send a red ag. Relying on losing contractors enables the community to deter favoritism significantly more easily than the random challenge procedure as it allows to use information that is shared by potential contractors in the industry. The level of penalty needed to fully deter corruption is lower, independent of the complexity of the project and depends on the degree of differentiation within the industry. Below this threshold, favoritism occurs in some states of nature and we characterize and compare the different equilibrium patterns of corruption under both mechanisms.A more elaborate example suggests that the alert-based mechanism tends to lead to more standard specifications of projects.

This paper addresses the issue of favoritism at the design stage of complex procurement auctions. A local community of citizens wants to procure a complex good or project and lacks the ability to translate its preferences into operational technical specifications. This task is delegated to a public officer who may collude with one of the firms at the design stage of the procurement auction in exchange of a bribe. Assuming that it is prohibitively costly to provide a justification for many aspects, we investigate two simple accountability mechanisms that ask the public officer to justify one aspect of the project, with the threat of being punished if he fails: a random challenge mechanism and an alert-based mechanism that requires justifying one aspect on which the rivals of the winning contractor send a red ag. Relying on losing contractors enables the community to deter favoritism significantly more easily than the random challenge procedure as it allows to use information that is shared by potential contractors in the industry. The level of penalty needed to fully deter corruption is lower, independent of the complexity of the project and depends on the degree of differentiation within the industry. Below this threshold, favoritism occurs in some states of nature and we characterize and compare the different equilibrium patterns of corruption under both mechanisms.A more elaborate example suggests that the alert-based mechanism tends to lead to more standard specifications of projects.

Corrupt government hiring is common in developing countries. This paper uses original data to document the operation and consequences of corrupt hiring in a health bureaucracy. Hires pay bribes averaging 17 months of salary, but contrary to conventional wisdom, their observable quality is comparable to counterfactual merit-based hires. Exploiting variation across jobs, I show that the consequences of corrupt allocations depend on the correlation between wealth and quality among applicants: service delivery outcomes are good for jobs where this was positive and poor when negative. In this setting, the correlation was typically positive, leading to relatively good performance of hires. (JEL D73, I11, J16, J24, J45, M51, O17)

Using a matching theory perspective, I analyze the design and the impact of Indian Civil Service state assignment mechanisms used to allocate elite civil servants to different parts of the country. I find that a recent change in the matching mechanism in 2008 has systematically skewed assignments by assigning relatively poor quality bureaucrats to disadvantaged states: regions with external foreign conflict, states with internal political strife, and newly-formed states. This paper i) analyzes the causes of these imbalances, ii) assesses the impact of this mechanism change on state capacity, development outcomes, and bureaucratic performance, and iii) highlights trade-offs in implementing alternate mechanisms. Global balance in quality across state cadres is a unique constraint that arises when applying matching to political economy settings, as the mechanism designer is a paternalistic central planner. Thus, less is left to the market compared to most canonical matching applications. On the other hand, the use of matching in political economy is also novel, and careful understanding of how different matching mechanisms address underlying correlations in the data has far-reaching consequences for bureaucratic performance and development outcomes.

This study aims to provide a neo-institutional explanation of why South Korea increasingly intends to share its developmental experience with the rest of the world. South Korea's knowledge sharing projects are the leading example of expansionary and self-defining efforts of its aid administration. By analysing the aid policy-making process, this paper explores the inside dynamics of an emerging donor government - pinpointing why aid bureaucracy stands at the centre of the rise of the knowledge dimension. This research highlights the particular statist developmentalism - as major bureaucratic discourse and momentum behind the aid expansion - that appears to be neither necessarily strategic nor coherent.

Due to the public good character of protective measures against natural disasters events, their allocation is very often in the realm of bureaucratic and expert agencies. Based on the economic theory of bureaucracy the behavior of a bureau providing the good protection against natural hazards is analysed. The existing model is extended by further institutional constraints accounting for societal controll mechanisms. The main proposition is that the allocation of protective measures through natural-hazard-management-agencies does also result in cost and allocative inefficiencies, however, the amount of allocative inefficiencies is relatively higher as compared to a normal bureau. This is mainly due to the potential of blame-shifting from politicians to bureaucrats. The considerations made in this paper can help to design a more efficient institutional framework in societal natural hazard management.

The paper is an exploratory historical analysis, based on documentary research and literature review, which focuses on the formation of the bureaucratic apparatus in the area of economic infrastructure, analyzed from the perspective of the construction of the Brazilian State and its technical, administrative and political capacities. The work explores the links between successive institutional arrangements and the construction of state capabilities of a technical and political nature. The trajectory of the institutional arrangements is analyzed based on a periodization that considers the inflections in the recent trajectory of the structuring of State functions, correspondingly, the organization of the public administration, its legal frameworks and institutional arrangements in each period. The periodization distinguishes the following moments: the beginnings of developmentalism (1930-1945); the parallel administration and developmental initiatives (1946-1963); state enterprises and the developmental State (1964-1988); and the emergence of the regulatory State and the resurgence of state activism (1988-2016). In the end, the conclusion is that it is dominant during most of the period analyzed the persistence of a vector of construction of the State apparatus that dislocates the formation of the bureaucracy away from the central administration.

How do corruption and the state apparatus interact, and how are they connected to the political and economic dimensions of state capacity? Motivated by historians' analysis of powerful empires, we build a model that emphasizes the corrosive effect of corruption on state power. Under general assumptions about fat-tailed risk, we show that, if fiscal capacity is strong, then the optimal response for the head of the state apparatus will be an endogenous lexicographic rule whereby local corruption is maintained at such a level that no erosion of state power is tolerated. Comparative statics shows the impacts of additional risk of crisis on corruption tolerance as well as the complementarity between personalistic rule and corruption. Implications of corruption at the head of the state apparatus are also analyzed. If fiscal capacity is not sufficiently strong, however, the state will have to over-tolerate corruption to retain its affiliates, risking its control in crises. Our model predicts that the correlation between state's political stability and corruption is non-monotonic across different levels of fiscal capacity, and this prediction is robustly consistent with recent cross-country panel-data.

Merit-based selection of bureaucrats is central to state capacity building, yet rare in developing countries. Most executives instead favor patronage -political discretion- in public employment. This paper proposes and tests an original theory to explain when executives forsake patronage for merit. The theory exploits exogenous variation in the institutional design of patronage states. In some, constitutions and budget laws monopolize patronage powers in the executive; in others, patronage benefits accrue to the legislature and public employees. When institutions fragment patronage powers and challengers control other government branches, merit becomes more incentive-compatible: it enables executives to deprive challengers of patronage while enhancing public goods provision to court electoral support. Drawing on 130 face-to-face elite interviews, a comparison of reforms in Paraguay, the Dominican Republic and the United States validates the theory. How patronage states are institutionally designed thus shapes their reform prospects: fragmented control over bad government can incentivize good government reforms.

This paper analyses the relationships between environmental compliance, corruption and environmental regulations in the case of forestry. Using a Principal-Agent model, we highlight interrelationships between firm's environmental non-compliance and corruption conditioned to the efficiency of the legal and regulatory framework. Moreover, we show that environmental compliance and judicial efficiency may be complementary or substitutable depending on the level of judicial efficiency to strengthen the forest stock. After having design a new indicator of environmental compliance, we test these predictions using cross section data for 59 developing countries. The empirical results support the predictions of the model. Judicial efficiency reduces corruption and environmental non compliance which are positively correlated and conditioned to judicial efficiency. We also find empirical evidences on the substitutability and complementarity of environmental compliance and judicial efficiency to preserve the forest stock.

This paper analyses the relationships between environmental compliance, corruption and environmental regulations in the case of forestry. Using a Principal-Agent model, we highlight interrelationships between firm's environmental non-compliance and corruption conditioned to the efficiency of the legal and regulatory framework. Moreover, we show that environmental compliance and judicial efficiency may be complementary or substitutable depending on the level of judicial efficiency to strengthen the forest stock. After having design a new indicator of environmental compliance, we test these predictions using cross section data for 59 developing countries. The empirical results support the predictions of the model. Judicial efficiency reduces corruption and environmental non compliance which are positively correlated and conditioned to judicial efficiency. We also find empirical evidences on the substitutability and complementarity of environmental compliance and judicial efficiency to preserve the forest stock.