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Beyond Experiments in Development EconomicsLocal Economy-wide Impact Evaluation$
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J. Edward Taylor and Mateusz J. Filipski

Print publication date: 2014

Print ISBN-13: 9780198707875

Published to Oxford Scholarship Online: September 2014

DOI: 10.1093/acprof:oso/9780198707875.001.0001

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The True Cost of Corruption

The True Cost of Corruption

Chapter:
14 (p.280) The True Cost of Corruption
Source:
Beyond Experiments in Development Economics
Author(s):

Antonio Yúnez-Naude

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198707875.003.0014

An econometric analysis of unique household and administrative data finds that 25% of payments under Mexico’s PROCAMPO income-transfer program fail to reach their intended beneficiaries in rural Mexico. The biggest losers are small, uneducated farmers. A local economy-wide impact evaluation model reveals that each peso of program leakage results in a 1.78-peso loss in total local income. This finding reflects significant negative production spillovers in local economies when program benefits are diverted from those who are entitled to them. Incomes of households that do not receive PROCAMPO payments fall by as much as 0.47 pesos per peso of program benefits lost to recipient households. Irregularities in this program have costs to the rural economy that exceed the income loss to eligible households.

Keywords:   corruption, Mexico, spillover, PROCAMPO, agricultural household, general equilibrium model, cash transfer

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