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R. ROSE AND C. PEIFFER
office a government that abuses its powers by hook and by crook and install a new government in the hope that it will reduce corruption. The results indicate that democratic institutions may have a substantial and significant impact on corruption. Net of past legacies, going from undemocratic to fully democratic is associated with an improvement in a country’s rating on the CPI by 22 percentage points. However, in a global context, national governments that fully respect civil liberties and political rights are in the minority; the median group consists of countries that are only partly democratic. Low-income countries tend to be most favoured as recipients of foreign aid because their economic and social development requires capital-intensive resources that they cannot finance themselves. The percentage of Gross National Income received as aid ranges from below one-tenth of 1% in countries such as Mexico to above 5% in more than a dozen countries scattered from Cambodia to Togo and Jordan. Although aid contracts normally include clauses imposing bureaucratic procedures intended to prevent corruption, national officials are much better placed than foreign auditors to get around these procedures to benefit themselves. As hypothesized, foreign aid is significantly associated with national corruption, but not in the direction that donors would like. In countries where aid bulks largest in its national economy because domestic economic resources are in short supply, aid may be important for public officials wanting to benefit from the capital-intensive corruption that it can finance. The CPI index is likely to be 14 percentage points lower in countries that receive the most aid than in countries that receive no aid. Natural resources are not distributed evenly within developing countries or globally. The World Bank measure of government income from natural resources as a percentage of GDP reckons dozens of countries have virtually no such income. Since natural resource income has only a low correlation with foreign aid, 0.13, its effect on corruption can be tested without any risk of statistical contamination. Although natural resource revenue increases national income, governments receiving a substantial income from natural resources are not significantly more corrupt, after taking other influences into account. This suggests that oilrich countries such as Russia and Nigeria are high in corruption because of a lack of early bureaucratization and democracy, while Norway and Australia receive large natural resource income without a corrupt impact because they bureaucratized early and are democracies.
