Politics as Usual: Evaluating Audit Agency Performance in Mexico

• In Event: Corruption in the Public Sector

Abstract

Anti-corruption efforts in Latin America have largely failed in the past decade. Reforms and institutions recommended by the international community have not delivered the corruption reducing results they promised on paper. Several populist leaders have secured power on the promise of fighting corruption with an iron fist at the expense of further democratic consolidation. Given progress in the development of institutions and resources for fighting corruption, why do anti-corruption efforts vary in reducing corruption in governments? This paper focuses on a specific type of anti-corruption organization, the supreme audit agency (SAA), and evaluates their performance across different subnational implementations in Mexico. The SAA is an institution with varying tools and resources for enforcing accountability in states and local governments. Although these agencies exist throughout Latin America, evaluating their performance in a single country allows for the controlled comparison of micro-level variation given macro-level similarities. This paper hypothesizes that SAA’s with strong organizational autonomy will result in more investigations than those with weaker autonomy. In addition, the politicization of an agency through the appointment of a politically tied auditor may result in fewer investigations than an agency with an independent auditor. Literature on Public Management is used to evaluate the extent to which an organization is autonomous on paper, and links between auditors and political parties is identified through their prior employment in state governments by reviewing their employment history. Data on SAA investigations are collected using Natural Language Processing to review yearly audits produced by an agency and identifying investigations and sanctions resulting from the audit using Machine Learning, this information is collected from 2008-2018 for all 32 states of Mexico covering the audits of over 1700 municipalities. New auditors are appointed frequently during this time period, therefore a differences-in-differences approach is used to identify causality in agency performance with a politically linked auditor serving as treatment. The results demonstrate that an agency with strong organizational autonomy and a politically linked auditor produce less investigations than independent auditors after controlling for state size, number of municipalities audited, and other factors that could affect agency performance. This paper contributes to the public management literature on evaluating agency performance as well as the comparative politics literature on identifying corruption. The findings of this paper suggest that reforms that were supposed to deliver anti-corruption efforts continue to be undermined by their politicization, this merits replication throughout Latin America and to other anti-corruption organizations created during this time period.

Author

• Alejandro Beltran, University of Arizona