Bureaucratic Complexity and Impacts of Corruption in Utilities

Abstract

This paper explores how the relationship between bureaucratic complexity and corruption affects the performance in utilities. We observe considerable variation in the performance of the utilities across countries, also across countries which appear to be relatively similar in terms of GDP per capita. Our hypothesis is that corruption is an important explanatory factor. In particular, corruption coupled with a complex regulatory structure can have negative effects on performance in this sector. The analysis points at the importance of considering the institutional framework and quality when introducing new bureaucratic procedures, as the same set of policy advice can work differently across countries. We measure bureaucratic complexity by the number of procedures needed for starting a business from the Doing Business Database provided by the World Bank.