Vito Tanzi

Bio: Vito Tanzi is an academic researcher from International Institute of Minnesota. The author has contributed to research in topics: Public finance & Government. The author has an hindex of 58, co-authored 266 publications receiving 16992 citations. Previous affiliations of Vito Tanzi include National Bureau of Economic Research & Inter-American Development Bank.

Corruption Around the World: Causes, Consequences, Scope, and Cures

Abstract: Corruption is attracting a lot of attention around the world. The paper surveys and discusses issues related to the causes, consequences, and scope of corruption and possible corrective actions. It emphasizes the costs of corruption in terms of economic growth. It also emphasizes that the fight against corruption may not be cheap and cannot be independent from the reform of the state. If certain reforms are not made, corruption is likely to continue to be a problem regardless of actions directly aimed at curtailing it.

Corruption, Public Investment, and Growth

Abstract: Corruption, particularly political or "grand" corruption, distorts the entire decision-making process connected with public investment projects. The degree of distortions is higher with weaker auditing institutions. The evidence presented shows that higher corruption is associated with (i) higher public investment; (ii) lower government revenues; (iii) lower expenditures on operations and maintenance; and (iv) lower quality of public infrastructure. The evidence also shows that corruption increases public investment while reducing its productivity. These are five channels through which corruption lowers growth. An implication is that economists should be more restrained in their praise of high public sector investment, especially in countries with high corruption.

Corruption Around the World: Causes, Consequences, Scope, and Cures

Abstract: Corruption is attracting a lot of attention around the world. This paper surveys and discusses issues related to the causes, consequences, and scope of corruption, and possible corrective actions. It emphasizes the costs of corruption in terms of economic growth. It also emphasizes that the fight against corruption may not be cheap and cannot be independent from the reform of the state. If certain reforms are not made, corruption is likely to continue to be a problem regardless of actions directly aimed at curtailing it.

Public Sector Efficiency: An International Comparison

Abstract: We compute public sector performance (PSP) and efficiency (PSE) indicators, comprising a composite and seven sub-indicators, for 23 industrialised countries. The first four sub-indicators are "opportunity" indicators that take into account administrative, education and health outcomes and the quality of public infrastructure and that support the rule of law and a level playing-field in a market economy. Three other indicators reflect the standard "Musgravian" tasks for government: allocation, distribution, and stabilisation. The input and output efficiency of public sectors across countries is then measured via a non-parametric production frontier technique.

The Underground Economy in the United States: Annual Estimates, 1930-80 (L'économie clandestine aux Etats-Unis: estimations annuelles, 1930-80) (La "economía subterránea" de Estados Unidos: Estimaciones anuales, 1930-80)

Abstract: This article presents yearly estimates for the underground economy in the United States for the period 1930-80. The method used for calculation is one developed a few years ago by the author, and it has been used in many other countries. The main conclusions can be summarized as follows: (1) in 1980 the underground economy, expressed as a percentage of gross national product (GNP), was somewhere between 4.5 percent and 6.1 percent; (2) the only other period in which it might have been higher than that was during World War II; (3) it has been increasing since the mid-1960s; and (4) over the period 1965-80, it has grown by more than 2 percentage points of GNP (by almost 50 percent). The recent trend is disturbing, as it seems to have accelerated in recent years, especially since the mid-1970s. This trend was probably influenced by the substantial increase in marginal tax rates over the period 1975-80, caused by inflation and the absence of significant tax cuts. It is not possible at this point to speculate on whether the tax cuts enacted in 1981 have reversed the trend. The results obtained in this paper should not be taken as precise measures of the underground economy; they are, at best, broad indications of trends and of orders of magnitude because they are sensitive to the assumptions made as well as to data revisions. However, it is comforting to realize that for 1974 and 1976 they are of the same order of magnitude as direct estimates by Simon and Witte (1980) and by the Internal Revenue Service (1979). A word on what has been measured is necessary. The estimates attempt to measure the incomes that were associated with the excessive use of cash and that presumably were not reported to the tax authorities. Whether these incomes were or were not measured by the national accounts authorities cannot be determined. Presumably, part of these incomes not only evaded the tax net but also may have escaped the attention of the national accounts authorities--but, how large this part was cannot be assessed with the information at hand. Should this part be large, it would have serious implications for the conduct of economic policy that is based largely on changes in economic activity as reflected by the national accounts. /// Le prA©sent article fournit des estimations annuelles relatives A l'A©conomie clandestine aux Etats-Unis pour la pA©riode 1930-80. La mA©thode utilisA©e pour effectuer les calculs a A©tA© mise au point par l'auteur il y a quelques annA©es et a A©tA© appliquA©e dans de nombreux autres pays. Les conclusions principales peuvent Aatre rA©sumA©es comme suit: 1) en 1980, l'A©conomie clandestine, exprimA©e en pourcentage du produit national brut (PNB), s'est situA©e entre 4,5% et 6,1%; 2) la seule pA©riode pendant laquelle elle a peut-Aatre reprA©sentA© un pourcentage plus A©levA© est celle de la deuxiA¨me guerre mondiale; 3) la part de l'A©conomie clandestine a augmentA© depuis le milieu des annA©es 60; et 4) au cours de la pA©riode 1965-80, elle a augmentA©, en proportion du PNB, de plus de deux points de pourcentage (soit de prA¨s de 50%). La tendance enregistrA©e rA©cemment est prA©occupante, A©tant donnA© que l'A©conomie clandestine semble se dA©velopper A un rythme croissant, surtout depuis le milieu des annA©es 70. Cette tendance a probablement A©tA© influencA©e par l'augmentation considA©rable des taux marginaux d'imposition au cours de la pA©riode 1975-80, augmentation due A l'inflation et A l'absence de rA©duction sensible des impA´ts. Il n'est pas possible A ce stade de dA©terminer si les rA©ductions d'impA´ts adoptA©es en 1981 ont renversA© ou non la tendance. Les rA©sultats figurant dans la prA©sente A©tude ne doivent pas Aatre considA©rA©s comme des mesures prA©cises de l'A©conomie clandestine; ils ne donnent, au mieux, que des indications gA©nA©rales des tendances et des ordres de grandeur parce qu'ils sont sensibles aux hypothA¨ses retenues ainsi qu aux rA©visions des donnA©es. Toutefois, il est rassurant de constater que, pour 1974 et 1976, les chiffres sont du mAame ordre de grandeur que les estimations directes effectuA©es par Simon et Witte en 1980, et par l'administration fiscale des Etats-Unis (Internal Revenue Service) en 1979. Il convient de prA©ciser briA¨vement les A©lA©ments qui ont A©tA© mesurA©s. Les estimations cherchent A A©valuer les revenus liA©s A l'utilisation excessive des rA¨glements en espA¨ces et qui n'ont probablement pas A©tA© dA©clarA©s A l'administration des impA´ts. Il n'est pas possible de dA©terminer si ces revenus ont ou non A©tA© A©valuA©s par les services responsables de la comptabilitA© nationale. Selon toute vraisemblance, une partie de ces revenus a non seulement A©chappA© A l'impA´t mais, en outre, a A©chappA© A l'attention des services de la comptabilitA© nationale; toutefois, il n'est pas possible d'A©valuer, sur la base des renseignements disponibles, l'ampleur de cette partie des revenus. Si elle est effectivement importante, elle pourrait avoir des effets graves sur la conduite de la politique A©conomique qui se fonde essentiellement sur les variations de l'activitA© A©conomique telles qu'elles apparaissent dans la comptabilitA© nationale. /// En este estudio se presentan estimaciones anuales de la "economA­a subterrAinea" de Estados Unidos durante el perA­odo 1930-80. El mA©todo empleado para el cAilculo es el ideado hace unos aA±os por el autor y se ha aplicado ya en muchos otros paA­ses. Las conclusiones principales serA­an las siguientes: 1) en 1980 la "economA­a subterrAinea", medida en porcentaje del producto nacional bruto (PNB), se situA³ entre 4,5 por ciento y 6,1 por ciento; 2) el otro perA­odo en que podrA­a haber sido superior fue el correspondiente a la segunda guerra mundial; 3) "la economA­a subterrAinea" ha venido creciendo desde mediados del decenio de los sesenta, y 4) durante el perA­odo 1965-80 ha aumentado mAis de 2 puntos porcentuales del PNB (casi 50 por ciento). Esta Aoltima tendencia es alarmante ya que parece haberse acelerado en los Aoltimos aA±os, especialmente a partir de mediados del decenio de los setenta. Probablemente esta propensiA³n se haya visto influida por el gran aumento de las tasas impositivas marginales durante el perA­odo 1975-80 causado por la inflaciA³n y la falta de reducciones tributarias significativas. De momento no se puede saber si las reducciones tributarias de 1981 habrAin invertido la tendencia. Los resultados obtenidos en este artA­culo no deben entenderse como medidas precisas de la "economA­a subterrAinea"; en el mejor de los casos son una indicaciA³n general de tendencias y de A³rdenes de magnitud que a su vez estAin influenciados por los supuestos utilizados y posibles revisiones de datos. Sin embargo, resulta alentador comprobar que para 1974 y 1976 son del mismo orden de magnitud que las estimaciones directas de Simon y Witte (1980) y de la DirecciA³n de Impuestos de Estados Unidos (1979). Conviene puntualizar quA© ha sido objeto de mediciA³n en este estudio. Las estimaciones tratan de cuantificar ingresos asociados al uso excesivo de dinero en efectivo y que puede suponerse no fueron declarados a las autoridades tributarias. No puede determinarse si estos ingresos han sido o no contabilizados por las autoridades encargadas de las cuentas nacionales. Cabe suponer que parte de estos ingresos no sA³lo evadieron ilegalmente la red tributaria sino que ademAis escaparon de la atenciA³n de las autoridades a cargo de las cuentas nacionales. Sin embargo, con la informaciA³n disponible, no es posible saber de quA© porcentaje se trata. Si este porcentaje de ingresos es importante, tendrA­a serias consecuencias sobre la aplicaciA³n de la polA­tica econA³mica, ya que A©sta se basa en gran medida en las variaciones de la actividad econA³mica tal como se reflejan en las cuentas nacionales.

Shadow Economies: Size, Causes, and Consequences

Abstract: Using various methods, the size of the shadow economy in 76 developing, transition, and OECD countries is estimated. Average size varies from 12 percent of GDP for OECD countries, to 23 percent for transition countries and 39 percent for developing countries. Increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy, especially in OECD countries. According to some findings, corruption has a positive impact on the size of the shadow economy, and a growing shadow economy has a negative effect on official GDP growth.