A Bonanza for Bad Politicians: Ilegal Mining and Criminal Candidates in Peru

• In Event: Resources, Budgets, and Regimes

Abstract

How do natural resource windfalls affect the quality of political candidates? Existing scholarship argues that non-tax public revenue has a negative effect on the characteristics of candidates because it impairs the capacity of voters to hold leaders accountable. This literature, however, has not considered other non-tax sources of revenue, namely, the rents derived from the informal and illegal exploitation of natural resources. In this paper, I analyze the effects of an increase of informal gold production in Peru. I find that in districts that have higher levels of informal gold mining, increases in prices worsens the quality of politicians. In particular, I use novel data on the criminal records of candidates to show that a spike in the price of gold attracts more criminal candidates to politics and leads elected politicians to be accused of committing a crime more often. Interestingly, I also find that candidates who have a criminal record are less likely to be elected. These results suggest that information on the trajectories of politicians is key to improve the quality of candidates that will be elected, and that the enforcement of natural resource regulation is crucial to eliminate the influence of rents on the behavior of politicians.

Author

• Antonella Bandiera, NYU