Exploring differences in corruption: the role of neighboring countries
The aim of this paper is to study whether corruption spreads across neighboring countries.
Spatial econometric techniques are used to analyze corruption interactions, testing whether
the perception of corruption in neighboring countries affect a country’s own corruption
once other variables are controlled for. For a given country it is found that corruption varies
neither with the behavior of its neighbors (there is no endogenous interaction) nor with
their exogenous characteristics (there is no contextual interaction). Corruption is therefore
not contagious, but neighboring countries tend to show similar levels of corruption because
they face similar characteristics and similar institutional environments.