Corruption is a common evil in Latin America—the region is considered the most corrupt just behind Africa. Within Latin America there is great variation in the levels of corruption. The following figure shows the most corrupt countries in the lower part. While Uruguay and Chile have corruption at European level; Argentina, Paraguay and the Dominican Republic are as corrupt as most African countries.

data chart

However, we must remember that corruption and impunity are helping many people to earn a living. That is a lot of people who can not join the formal labour market or find better paid jobs, depending largely on the income earned from corruption. For example, in Mexico the salary of the police is very low, so without the bribes they receive, their income would be greatly affected. Consider the other side; there are many illegal street vendors who depend on bribing low-level bureaucrats to sell their merchandise. Suppose the regulation becomes stronger, aiming to end low-level corruption, then all these generally poor people will suddenly find themselves with considerably less income; in the previous example, both badly paid corrupt policemen and poor informal workers without the means to access formal, well-paid jobs will be greatly affected. Stability would be threatened from all fronts.

TSC data specialist Omar Espejel, economist by the University of London, presented this research at the Carroll Round conference in Georgetown University. What does he propose to deal with a situation as unique as the one that his research has identified?

Research done with Viridiana Rios, Harvard professor, reveals that Latin American governments should concentrate on sweeping the stairs from above, that is, regulation should focus on facing great corruption that involves high-level bureaucrats and large wealthy firms. The kind of corruption that affects the poorest people is behaving as an aid to maintain social cohesion and lower levels of poverty and inequality, so governments must be very careful when fighting against it.

If you have to take something from this article: consider the second-order effects of everything!