Construction corrupts: empirical evidence from a panel of 42 countries

The construction sector, whether privately or publicly financed, is characterized by potentially large rents and government intervention making it vulnerable to corruption. Consistent with this, both case-study and survey evidence has been provided highlighting the problem of malfeasance in this sector. In this article, we test the proposition that a bigger construction sector is likely to be inimical to clean government based on a panel of 42 countries over the period 1995-2011. We control for a range of potentially confounding variables and the expectation that corrupt public officials may favor the development of this sector because it increases the volume of rents available to them. Our empirical evidence shows that a larger construction sector will tend to increase perceptions of the extent to which public power is exercised for private gain.