number of factors beyond corruption, but it is likely that the skewed incentive structure in which corruption plays a role (and is a symptom) is a significant part of this low return.<sup>27</sup> Differences across countries in the types of corruption (damaging or less so) that are prevalent may also account for what appears to be a complex and context-specific relationship between general measures of corruption and growth outcomes across countries (Rock and Bonnett, 2004).

Nonetheless, our knowledge about levels of particularly harmful corruption in infrastructure (that which involves diversion and substandard construction) is minimal. As we have seen, existing measures of corruption available across countries and regions tend to be based on perceptions, which tend (if anything) to measure the extent of the petty corruption that interviewees experience directly. Again, we have seen that most individuals and even firms appear only partially informed as to the extent of ‘grand’ corruption involving officials and contractors. Construction and infrastructure corruption varies considerably across countries with similar scores on overall country-level measures of corruption. And finally, all of the usual measures of corruption relate to the extent and scale of bribe payments. They do not provide information on the type of bribe payment, the level of theft of materials, the construction codes being ignored and so on. Without such measures we can say little about the extent of the most damaging forms of corruption in infrastructure across different countries.<sup>28</sup>

# **What Does This Mean for Measurement of Corruption in Infrastructure?**

Of course, such measures will be some of the hardest to uncover. They are not part of everyday experience, so they are difficult to pick up in general surveys. Even large-scale company surveys such as BEEPS do not yet tackle the non-financial elements of corruption. The response should not be to ‘live with the measures we have,’ however, as these are likely to be poorly designed to determine the extent of the problem and the success of remedial actions in infrastructure. One approach would be to look at the most damaging _consequences_ of corruption, which are more easily measurable.

Minimizing the damage done by corruption involves countering the incentives to build the wrong thing and to build and then operate it badly. If this is our concern, we should focus attention on macro-sectoral issues such as overall budgeting and project selection and on physical auditing of the status of physical capital. We should see if budgets are adequate (and paid) for operations and maintenance, if O&M is actually carried out in a way that maintains infrastructure quality, if the process for selecting projects picks those with high economic return and if the new infrastructure is well constructed. If all of these conditions are met, we will know that the impact of corruption in infrastructure on overall

> 27 In Bank projects, a one standard-deviation increase in the Kaufman-Kraay rule of law measure increases the chance of a successful project by sixteen percentage points (Dollar and Levin, 2005)

> 28 Grand corruption, at least, may be a comparatively ineffective substitute for lobbying.  Campos and Giovanni (2006) use the BEEPS data to suggest that firms which lobby more bribe less and report far higher levels of influence over government decisionmaking.  It may be, then, that governance reforms which increase the potential for lobbying will have a negative development impact even if they simultaneously reduce levels of corruption.

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