Naypyidaw-on-Hudson: Isolated capitals are more corrupt

Two recent papers by Filipe Campante of Harvard’s Kennedy School and Quoc-Anh Do of the Singapore Management University argue that geographically isolated capital cities are more prone to corruption.  (This certainly fits with the anedotal evidence of countries like Myanmar, Kazakhstan, and Nigeria, that have moved their capitals to more isolated locations.)

The first paper looks at U.S. states, finding that those who are farther from major population centers — think Albany, Annapolis, Jefferson City, Trenton, or Springfield — have higher rates of public officials being convicted for corruption offenses. This is likely related to the fact that less isolated capital cities have more politically engaged citizens living nearby and the goings-on in the statehouse get more scrutiny from media outlets headquartered nearby. As an example, the authors compare the cases of former New York State Senate Majority leader Joseph L. Bruno and Massachusetts House Speaker Salvatore DiMasi. Both men were convicted of similar corruption charges around the same time, but the Massachusetts papers of record — the Boston Globe and the Boston Herald devoted far more coverage to DiMasi than the New York Times, New York Post, and New York Daily News did for Bruno scandal.

The authors also note that this is all very ironic, given that capitals were often initially moved away from major commercial centers in order to discourage corruption. 

The second paper, written with Bernardo Guimares of the Sao Paolo School of Management finds a similar pattern for international capitals. This time, they add in the causal factor that isolated national capitals are safer from rebels: 

Motivated by a novel stylized fact { countries with isolated capital cities display worse quality of governance { we provide a framework of endogenous institutional choice based on the idea that elites are constrained by the threat of rebellion, and that this threat is rendered less eective by distance from the seat of political power. In established democracies, the threat of insurgencies is not a binding constraint, and the model predicts no correlation between isolated capitals and misgovernance. In contrast, a correlation emerges in equilibrium in the case of autocracies. Causality runs both ways: broader power sharing (associated with better governance) means that any rents have to be shared more broadly, hence the elite has less of an incentive to protect its position by isolating the capital city; conversely, a more isolated capital city allows the elite to appropriate a larger share of output, so the costs of better governance for the elite, in terms of rents that would have to be shared, are larger. We show evidence that this pattern holds true robustly in the data. We also show that isolated capitals are associated with less power sharing, a larger income premium enjoyed by capital city inhabitants, and lower levels of military spending by ruling elites, as predicted by the theory. 

In addition to these factors, I wonder if part of the issue may be the ability to attract qualified — and not corrupt — civil servants. No offense to Albany or Abuja, but I’m guessing the governments based in Boston, or Denver, not to mention Paris and Tokyo, might have an easier time attacting the best and the brightest.

Via Cherokee Gothic