Frightened Mandarins: The Adverse Effects of Fighting Corruption on Local Bureaucracy

• Author: Erik H. Wang
• DOI: http://doi.org/10.1177/00104140211060276
• Published date: 01 September 2022
• Date: 01 September 2022
• Subject Matter: Articles

Article

Comparative Political Studies

2022, Vol. 55(11) 1807–1843

© The Author(s) 2022

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DOI: 10.1177/00104140211060276

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Frightened Mandarins:

The Adverse Effects of

Fighting Corruption on

Local Bureaucracy

Erik H. Wang

1



Abstract

Canonical theories of bureaucracy demonstrate the need for enhanced

monitoring in government hierarchies. I argue that intensive top-down

monitoring may reduce the productivity of bureaucrats by frightening

them away from the informal practices that they would otherwise rely on

when completing daily tasks. Utilizing a unique dataset of sub-provincial in-

spections in China’s recent anti-corruption campaign, I identify this “chilling

effect”by exploiting variation in the timing of inspections from 2012 to 2017. I

show that these anti-corruption activities lower the area of land development

projects proposed by bureaucrats. Causal mediation analyses with investi-

gation data and original measures of corruption potential reveal that these

effects are unlikely driven by reduction of actual corruption. Extension an-

alyses suggest similar consequences on revenue collection and environmental

regulation. Although scholars of state-building equate low corruption with

effective bureaucracy, these f‌indings present a paradox where intensive state-

led efforts to lower corruption may further undermine bureaucrats’

productivity.

1

Coral Bell School of Asia Pacif‌ic Affairs, Australian National University (ANU), Canberra,

Australia

Corresponding Author:

Erik H. Wang, Lecturer, Department of Political and Social Change, Coral Bell School of Asia

Pacif‌ic Affairs, Australian National University (ANU), Hedley Bull Building, 130 Garran Road,

Canberra, 0200, Australia.

Email: erik.wang@anu.edu.au

Keywords

political economy of development, anti-corruption, bureaucracy, state

capacity, China

Introduction

What happens to a bureaucracy after intensive anti-corruption efforts?

1

Studies show that corruption directly impedes the ability of bureaucracy to

perform basic yet critical tasks, such as resource allocation, revenue col-

lection, and public goods provision (Gould & Amaro-Reyes, 1983;Rose-

Ackerman and Palifka, 2016). Scholars of state-building generally equate low

corruption with capable bureaucracy (Evans and Rauch, 1999;Kohli, 2004;

B¨

ack & Hadenius, 2008). Canonical principal-agent theories of the bu-

reaucracy also demonstrate the need for enhanced monitoring in government

hierarchies (e.g., Hart & Holmstrm, 1986;Laffont & Martimort, 2009). We

may thus have reasons to expect that bureaucrats work more effectively

following initiatives to root out corruption.

However, this research contends that through a “chilling effect,”efforts to

combat corruption may actually undermine the ability of bureaucrats to ac-

complish daily tasks. Working with huge caseloads, public administrators tend

to sidestep formal procedures that are regarded as time-consuming or out of

touch with reality. Proliferation of such informal practices leaves the bu-

reaucracy vulnerable to anti-corruption activities that emphasize rigid ad-

herence to formal rules.

2

Decline in the productivity of bureaucrats is a

strategic reaction. To the extent that public administrators continue to view

informal practices as the wherewithal to overcome bureaucratic pathologies,

their productivity is likely to decline as anti-corruption inspection increases

the cost of following such practices. This deliberat e choice could also stem

from the fact that some aspects of bureaucrats’daily work feature heavy state-

business interactions and therefore likely invite visits by anti-corruption

inspectors, who will then learn of the bureaucrats’past records of proce-

dural violations. Reducing work activities thus decreases the probability of

receiving attention in an anti-corruption probe.

Empirically, I draw on a diverse array of quantitative and qualitative

evidence from China to test this theory. First, I compile an original dataset for

sub-provincial anti-corruption inspections between 2012 and 2017 and match

it with over 545,753 proprietary records of land auction initiated by local

bureaucrats. The identif‌ication strategy exploits variation in the timing of the

inspections, which comes from decision-making at the higher-level that is

plausibly immune to lower-level political conditions. Results from a series of

f‌ixed-effect models show that anti-corruption efforts lead to a substantial

decrease in the work activities of bureaucrats in local “Bureaus of Land and

1808 Comparative Political Studies 55(11)

Resources”(BLR), measured via the total area (or the number) of land parcels

that bureaucrats propose for auction on a monthly basis. These results are also

robust to a multiple-period difference-in-differences (DiD) strategy that

further reduces time-varying confounding by matching counties with identical

histories of past inspections. Second, I conduct causal mediation analyses to

rule out the possibility that the negative effect of anti-corruption on pro-

ductivity identif‌ied here may conf‌late with a reduction of actual corruption. To

this end, I employ individual level data for anti-corruption arrests in China,

and also develop two original measures of each locality’s corruption potential

over time using geo-coded transaction price of each land parcel. Third, my

extension analyses in the Appendix show that the theory travels to other tasks

of the Chinese bureaucracy, such as revenue collection and environmental

regulation. These additional results help further address the concern that the

negative effect of anti-corruption on bureaucrats’productivity may be a result

of economic slowdown or the shifting balance of power from the local

governments to the strongman at the center. Furthermore, I complement the

quantitative analyses with qualitative evidence for the mechanisms gathered

from interviews with different bureaucrats, as well as press reports and po-

litical discourse of the Chinese Communist Party (CCP).

This research makes several theoretical contributions, f‌irst and foremost to

the literature on anti-corruption strategies. Evaluation of specif‌ic anti-

corruption techniques has been the preoccupation of this scholarship (see

Gans-Morse et al., 2018 for a review).

3

I situate my study in the larger context

of recent calls in political science for shifting scholarly attention from in-

cremental techniques to “big bang”approaches (Rothstein, 2011;Persson,

Rothstein and Teorell, 2013). The growing recognition that incremental

techniques fail to resolve systemic corruption echoes arguments in earlier

game-theoretic work on corruption. Formal models demonstrate that variation

in the level of corruption ref‌lects the existence of multiple equilibria, in which

clean and corrupt bureaucracies are both steady states that self-perpetuate

despite small, temporary deviations (Cadot, 1987;Andvig and Moene, 1990).

These insights, shared by a wider community of scholars (e.g., Caiden &

Caiden, 1977), highlight the inability of “short-run anti-corruption campaign”

to reduce corruption (Tirole, 1996). However, the new research paradigm on

the effect of systemic, as opposed to specif‌ic, solutions to the corruption trap

faces acute empirical challenges. Its advocates acknowledge the diff‌iculty to

locate empirically viable cases as such strategies are only feasible in rare

historical instances (Gans-Morse et al., 2018). For its unprecedented duration

and reach, the still ongoing anti-corruption campaign in China offers one

opportunity to investigate a “big-bang”approach in the real world (Manion,

2016), which is the subject of this research.

More specif‌ically, whereas the anti-corruption literature chief‌ly focuses on

assessing whether certain strategies prove successful in reducing corruption,

Wang 1809