# **Does Greater Accountability Improve the Quality of Delivery of Public Services? Evidence from Uganda**

**Abstract:** While the importance of corruption as a possible impediment to foreign investment in an international context is now well realized, it is not clear to what extent corruption affects, either directly through bribe-taking or indirectly through inadequate quality of public services, the level of economic activity by domestic entrepreneurs. Using a large survey from Uganda, we show that domestic and foreign entrepreneurs, government officials, and households are unanimous in highlighting the pervasiveness and importance of corruption. Efforts to establish institutions to deal with corrupt practices have not been matched by public education on the proper procedures. The fact that such lack of knowledge on procedures to report corruption increases households’ risk of being subject to bribery and significantly reduces the quality of public service delivery leads us to conclude that improved accountability will be important to reduce the incidence of corruption and improve delivery of public services.

## **1. Introduction**

Higher levels of economic integration across countries and greater availability of information provide significant potential for efficiency gains, but have also helped to expose corruption. Corruption is defined as the abuse of public power for private benefit, and is a key constraint to efficient allocation of economically valuable resources, effective provision of public goods and services, and people’s confidence in the state and the legal system. High levels of accountability, defined as a system of open and transparent controls, can help to improve economic efficiency and reduce the scope for discretionary action by public officials. Regulations are critical for the development process in at least two ways.

First, it is widely held that a significant part of the growth that is expected to reduce poverty in developing countries has to come from private investment. Rent seeking by partial and corrupt officials, however, increases the costs associated with entrepreneurial investment and may lead foreign investors to take their business elsewhere. Corruption also forces domestic entrepreneurs to go underground, leading to high levels of informality and a narrow tax base. Complaints about lack of transparency, high levels of regulatory intervention and corruption, and the cost that these impose on doing business are at the core of recent empirical evidence gathered from entrepreneurs in the Global Investment Climate Survey.

A second reason is that developing countries require significant investment in public goods, such as infrastructure, education, and health, to attract private investment and create a broad-based and egalitarian economic development. However, high levels of corruption have been shown to bias public spending in undesirable directions and reduce the quality of provision of such services. Unless non-corrupt and transparent mechanisms to allocate public funds are available and officials are accountable for the allocation, their full economic potential may not be realized. The harmful and potentially far-reaching importance of corruption, as well as the fact that high levels of economic growth do not necessarily lead to a reduction of corrupt practices, is now widely recognized. As a consequence, the issue has moved up on the agenda of international institutions and institutional reforms to combat corruption, including anticorruption commissions, in many countries.

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