The Politics of Inhibition: Theory and Evidence from Transportation Projects

• In Event: The Causes, Costs, and Pursuit of Corruption in Latin America

Abstract

How do governments control corruption? Existing work focuses on accountability and judicial institutions that punish malfeasance after it occurs, or ideally deter it through the possibility of future punishment. Yet many governments recognize that traditional ex-post sanctions are “too little, too late.” They instead depend on inhibitory institutions, meaning bureaucracies designed to review, stall, or stop actions that put state resources at risk. In this paper, I examine how comptrollers, inspector-generals, and planning institutions are central and neglected players in the control of corruption, particularly in the infrastructure sector notorious for graft. Bureaucrats use foot-dragging and deliberate obstruction to block projects that they suspect are directed to political cronies or inflated in size and budget. In some cases, politicians revise or give up on questioned projects; in others, they use executive orders to circumvent inhibitory institutions. I use the cases of subway and highway projects in Colombia and Peru to illustrate how inhibitory institutions work and their clashes with presidents. I then look at the geographic roll-out of inhibitory institutions in Peru and Colombia to estimate their causal effects on the quantity and quality of local public infrastructure investment. The results suggest a possible trade-off in which inhibitory institutions lower the level of investment in infrastructure but improve the selection and execution of projects.

Author

• Alisha Caroline Holland, Harvard University