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Explaining Leakage of Public Funds

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  • Svensson, Jakob
  • Reinikka, Ritva

Abstract

Using panel data from an unique survey of public primary schools in Uganda we assess the degree of leakage of public funds in education. The survey data reveal that on average, during the period 1991-95, schools received only 13% of what the central government contributed to the schools? non-wage expenditures. The bulk of the allocated spending was either used by public officials for purposes unrelated to education or captured for private gain (leakage). Moreover, we find that resource flows and leakages are endogenous to schools socio-political endowment. Rather than being passive recipients of flows from government, schools use their bargaining power vis-a-vis other parts of government to secure greater shares of funding. These results have clear implications for research. The survey findings also had a direct impact on policy.

Suggested Citation

  • Svensson, Jakob & Reinikka, Ritva, 2002. "Explaining Leakage of Public Funds," CEPR Discussion Papers 3227, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3227
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    References listed on IDEAS

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    1. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    2. Di Tella, Rafael & Schargrodsky, Ernesto, 2003. "The Role of Wages and Auditing during a Crackdown on Corruption in the City of Buenos Aires," Journal of Law and Economics, University of Chicago Press, vol. 46(1), pages 269-292, April.
    3. J. Svensson, 1999. "Aid, Growth and Democracy," Economics and Politics, Wiley Blackwell, vol. 11(3), pages 275-297, November.
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    More about this item

    Keywords

    Leakage; Public expenditure tracking survey; Corruption; School funding;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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