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Border is better than distance? Contagious corruption in one belt one road economies

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Abstract

Employing data of one belt one road (OBOR) countries from 2002 to 2013, this study compares the contagious corruption difference between geographic border and distance through the dynamic spatial econometric model. The empirical results not only confirm that corruption in OBOR countries exists under various contagious channels, but also indicate that border effects, serving as contagious channels for corruption, are better than distance effects. The empirical implication is that OBOR countries with a common border tend to possess contagious corruption due to the hosts’ demonstration effect and the convenience of transferring illegal assets. We advise that those OBOR countries should enhance the supervision of cash flow, look for any opportunity of kicking back a portion of the stolen money, and establish a specific task force on corruption.

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Notes

  1. Few political economists are concerned about the definition of neighbor in their research on corruption. Anselin and Moreno (2003), Becker et al. (2009), and Márquez et al. (2011) define the average corruption value as neighbors’ corruption, which is the sum of the corruption values of neighbors sharing a common border, and this sum is then divided by the number of neighbors. In addition, Attila (2008) expands the definition of neighbors through geographic distance in order to better represent contagious corruption.

  2. In order to define the geographic-weighted matrix, we choose land borders rather than maritime borders. Thus, we have to abandon some island countries.

  3. Anselin (1990) argues for delineating a specified circle area that defines a certain distance as the radius of a circle, which is the rough measure of the spatial-weighted matrix.

  4. Reviewing the political economic perspective, contagious corruption is possible in the spatial economy. Researchers summarize the institutional characteristics of geographic infection, including democracy (Brinks and Coppedge 2001), liberty (Simmons and Elkins 2004), and policy choice (Meseguer 2006). Inter-communication in the World Bank and OECD accelerates corruption infection (Márquez et al. 2011; Becker et al. 2009; Attila 2008). However, our topic concerns what is an optimal neighbor from the geographic perspective; thus, we focus on which is a better contagious channel between border and distance.

  5. In line with the viewpoint of Goel and Saunoris (2014), distance is a spherical distance, calculated by the longitude and latitude of the capitals in the OBOR countries.

  6. The theory is ambiguous on how these factors influence national corruption (La Palombara 1994; Rose-Ackerman and Coolidge 1997; Huntington 1996).

  7. Regime durability (Durable) might lead to changes in the level of national corruption. In calculating the Durable value, the first year during which a new (post-change) polity is established is coded as the baseline “year zero” (value = 0), and each subsequent year adds one to the value of the Durable variable consecutively until a new regime change or transition period occurs.

  8. We use diagrams of Moran from the 33 OBOR countries, and Table 4 contains the countries’ full name and abbreviation.

  9. It is worth noting that apart from spatial-weighted matrix l corruption, all the variables in any econometric specification are defined at the national single country level.

  10. Although the previous literature argues that higher GDP per capita usually leads to lower corruption, developed countries may not have lower corruption. The various factors of corruption from economy, politics, and society are the main reason. We also discover that all OECD countries are located in quadrant I in the scatter diagram of spatial autocorrelation, meaning some developed countries have higher corruption in the real world.

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Authors and Affiliations

  1. School of Economics and Finance, Xi’an Jiaotong University, Xi’an, Shaanxi, China

    Gen-Fu Feng, Bo Sui, Min-Yi Dong & Chun-Ping Chang

  2. Middlesex University Business School, The Burroughs, London, NW4 4BT, UK

    Chun-xia Jiang

  3. Department of Marketing Management, Shih Chien University, Kaohsiung, Taiwan

    Chun-Ping Chang

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  1. Gen-Fu Feng
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Feng, GF., Sui, B., Dong, MY. et al. Border is better than distance? Contagious corruption in one belt one road economies. Qual Quant 52, 1909–1928 (2018). https://doi.org/10.1007/s11135-017-0579-3

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