Abstract
This study examines the role of both religion and culture [as measured by the cultural clusters of countries in the GLOBE study of House et al. (Culture, Leadership, and Organizations: The GLOBE Study of 62 Societies, 2004)] on the levels of perceived corruption. Covering the period from 2000 to 2010, the study uses three different measures of perceived corruption: (1) the World Bank’s Control of Corruption measure, (2) Transparency International’s Corruption Perceptions Index, and (3) Heritage Foundation’s Freedom from Corruption Index. A system of three simultaneous equations is used, with the jointly endogenous variables being (a) perceived corruption, (b) perceived government legitimacy, and (c) perceived government effectiveness. The results show that both cultural and religious differences are incrementally related to perceived corruption, even after controlling for other economic and political factors. Specifically, relative to the Protestant Christian religion, the non-Protestant Christian religion, the Islamic religion, and Other Religion/No Religion are positively associated with higher corruption (or negatively with anti-corruption), but the Buddhist and Hindu religions appear to be not significantly different from the Protestant Christian religion. On the cultural side, compared to the Anglo-Saxon cultural tradition, the other European clusters are incrementally positively associated with higher corruption, but this tendency is offset by more effective political governance, thus leading in the case of the German and Nordic cultures to levels of corruption not statistically different from the Anglo cluster. All the non-European cultural clusters are associated with significantly higher corruption tendencies, but the overall effect is mitigated partially by either greater perceived political legitimacy (Latin-American, Middle-Eastern, Caribbean, and Pacific Islander), or greater political effectiveness (Confucian and South-East Asian).
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Notes
Among the religions not specifically included, Judaism is probably the most notable. However, the sources used to identify the religions did not have sufficient information on the proportion of the population (world-wide) professing the Jewish faith to enable it to be identified as a separate religion. The sources used are Wikipedia.com, the Pew Foundation, the CIA World Factbook, and country-specific websites where necessary to cross-check information.
Although the cultural dimension scores of each country could have been used as the measure of culture, the policy implications of the findings from such a study are not easy to discern. For example, if a country scored high on Power Distance but low on Assertiveness, and if Power Distance was found to be positively related to corruption while Assertiveness was negatively related, no clear-cut policy recommendation would emerge since it is not clear how either Power Distance or Assertiveness can be changed in a given country. In contrast, if a country’s culture is seen as contributing to higher corruption, the whole panoply of corrective measures (legal reforms, law enforcement, public education campaigns, etc.) can be brought to bear which do not depend on any one cultural trait.
“Political legitimacy” has a well-developed literature. Tyler (1990) has defined political legitimacy as a reservoir of trust or goodwill that governing authorities draw upon in order to secure acceptance and compliance with the law. In an value-free approach to operationalizing this concept, Booth and Seligson (2009) defined six dimensions of political legitimacy: (1) support for or recognition of a political community; (2) support for core regime principles; (3) support for political institutions; (4) evaluation of government performance; (5) support for local government; and (6) support for incumbents as political authorities.
Democracy may be described as a sufficient but not a necessary condition for political legitimacy. In particular, Weber (1978) has suggested that there are three independent sources of political legitimacy: (1) Charismatic authority where a leader emerges who is widely believed to possess superior knowledge and/or ability; (2) Traditional authority, where the populace accepts the form of government as legitimate because of longevity or customs; and (3) Rational-legal authority where the government’s power derives from established law and political institutions (e.g., via a constitution and/or expression of popular will).
The sources of the World Bank Governance indicators can be found at the following website: http://info.worldbank.org/governance/wgi/pdf/cc.pdf. A description of the methodology is given by Kaufman et al. (2010).
The indexes in the series are:
(1) Business freedom: Business freedom is a quantitative measure of the ability to start, operate, and close a business that represents the overall burden of regulation as well as the efficiency of government in the regulatory process.
(2) Trade freedom: Trade freedom is a composite measure of the absence of tariff and non-tariff barriers that affect imports and exports of goods and services. Different imports entering a country can, and often do, face different tariffs.
(3) Monetary freedom: Monetary freedom combines a measure of price stability with an assessment of price controls.
(4) Government size/spending: This component considers the level of government expenditures as a percentage of GDP.
(5) Fiscal freedom: Fiscal freedom is a measure of the tax burden imposed by government.
(6) Property rights: The property rights component is an assessment of the ability of individuals to accumulate private property, secured by clear laws that are fully enforced by the state.
(7) Investment freedom: The extent to which there are no constraints on the flow of investment capital. Individuals and firms would be allowed to move their resources into and out of specific activities both internally and across the country’s borders without restriction.
(8) Financial freedom: This is a measure of degree of independence from government control and interference in the financial sector.
(9) Freedom from corruption: This is a measure of the extent to which corruption erodes economic freedom by introducing insecurity and uncertainty into economic relationships.
(10) Labor freedom: The labor freedom component is a quantitative measure that looks into various aspects of the legal and regulatory framework of a country’s labor market.
We used the SAS program PROC MODEL with options for OLS, 2SLS, and 3SLS. This allowed the Hausman tests to be conducted simultaneously for all three equations. Thus, only one set of Hausman test results is reported in Table 4 (as described later).
Because we use dummy variables to represent cultural groupings across all 11 years of the analysis, the model estimated is best viewed as a two-way fixed-effects panel analysis (with cultural grouping and time as the two fixed effects). Given the focus of the study, this approach seems to make the most sense. Note that the religion variables are estimated as time-invariant ratios, thus adding to the irrelevance of a country-level fixed effects panel.
More recently, Johnson et al. (2006) have derived a model which shows that countries which develop political structures that ensure accountability benefit from such natural resources, while those with poor internal governance structures suffer from this resource curse.
The potential explanation that extra government expenditures in the post-financial crises period accounted for the positive sign of GOVT_PCT does not appear to hold because, in a robustness check, when the data for 2007–2010 are omitted, the coefficient for GOVT_PCT was still positive and statistically significant in all the regressions with WB_COC as the dependent variable. Similarly, the presence of outliers as the possible reason for the positive sign of GOVT_PCT is contradicted by the continuing positive sign when all observations with GOVT_PCT greater than 100 are deleted in the equation for WB_COC.
Because the Arab political uprising which has been called the “Arab Spring” started in December 2010, the finding of greater perceived political legitimacy in the Mid-East/North African cultural cluster may seem surprising. See the National Public Radio review of the events at http://www.npr.org/2012/01/02/144489844/timeline-the-major-events-of-the-arab-spring. It is possible that the sources relied on in the World Bank survey of the perceived political legitimacy of the regimes in these regions misread the quiescence of the populace of these countries. Alternatively, the uprising may have been spontaneous and not entirely predictable from the recent history of these regimes.
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Mensah, Y.M. An Analysis of the Effect of Culture and Religion on Perceived Corruption in a Global Context. J Bus Ethics 121, 255–282 (2014). https://doi.org/10.1007/s10551-013-1696-0
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DOI: https://doi.org/10.1007/s10551-013-1696-0