construction process had been required, supporting widespread evasion of building codes. Within a week of the quake, 37 builders, architects and engineers of failed buildings were charged with culpable homicide and criminal conspiracy.<sup>33</sup> Similarly, in the 2002 earthquake in Changureh, Iran (which claimed 261 lives) and the 2003 earthquake in Bam, Iran (41,000 deaths) a major factor was the non-enforcement of building codes.

Indeed, construction is an industry that is perceived as particularly poorly governed worldwide. Transparency International’s 15 country poll ranked construction as the most corrupt industry of all (see Figure Two).<sup>34</sup> Similarly, a Control Risks survey of international companies which asked if they had lost a bid in the past year because a competitor paid a bribe found that public works/construction firms were most likely to suggest this had occurred (Bray, 2005). Again, construction firms surveyed in Eastern Europe have significantly larger bribe budgets than the average firm, and they bribe more often. In particular, they reported themselves more likely than the average firm to make payments for licenses and permits. Data from global enterprise surveys similarly suggests that across a range of countries, construction permitting appears to be a regulatory area particularly prone to corruption. Once again, poorer countries appear to have more corrupt contracting, permitting and licensing procedures on average –see Figure 3 (from Kenny, 2008).<sup>35</sup> This all suggests caution in assuming that additional regulation involving earthquake resistant design will necessarily translate into safer buildings rather than additional rents (see Box 11). Indeed, regulation can provide competitive advantage to those firms best at corrupting officials rather than those firms best at constructing buildings, driving down the quality of all construction. Because non-code construction is illegal, it provides ongoing opportunities for rent-seeking from officials while denying many owners legal title. In Addis Ababa, for example, high construction standards have relegated many low-income households to ownership of illegal property with no rights to sale or transfer (Buckley and Kalarickal, 2006). In Turkey and Karachi in Pakistan at the turn of the Millennium as much as half of the urban population lived in illegal settlements for similar reasons (World Bank, 1999).<sup>36</sup> And householders without legal title face further disincentive to invest in improving the quality and safety of their home.

increase the level of local corruption –they suggest each $1 increase in per capita average annual FEMA relief to a state increases the corruption convictions per capita by 2.5 percent in that state. In other words, at least within countries, natural disasters can be a cause of corruption.

> 33 Again, this is also a problem in wealthy countries.  In the US, local governments were forced to adopt zoning and building regulations to reduce potential flood damage as part of the conditions for communities to access national flood insurance.  But code violations are rife, as we have seen in the case of Dade county above.

34 http://www.transparency.org/policy_research/surveys_indices/global/bpi 35 The nature of the causality between weak institutions and low income is a topic of considerable debate. See Sachs (2003) versus Rodrik et. al. (2002). Regardless of the exact nature of the link (and surely causality runs in both directions), the correlation remains and is persuasively strong.

36 A second set of perverse incentives can involve rent control. If building owners cannot raise rents on current tenants, in extreme cases it might be advantageous to them for buildings to collapse so that they can put up a new structure with new tenants who will pay higher rents (this suggested by Apurva Sanghi) 21