Mexican president’s push for centralized government may be fostering corruption

Baker Institute expert examines country’s pervasive problem

President Andrés Manuel López Obrador has pledged to end corrupt practices in Mexico. Yet some of his other goals — such as returning to a more centralized government — might actually foster corruption, according to a new research paper from Rice University’s Baker Institute for Public Policy.

The parliamentary chamber of the National Palace in Mexico City. Credit: 123RF.com/Rice University

“Corruption and Democracy in Mexico: An Empirical Analysis” was authored by Jose Rodriguez-Sanchez, postdoctoral research fellow in international trade at the Baker Institute’s Center for the U.S. and Mexico.

“The relationship between democracy and corruption is complex, and it is a challenge to calculate it due to the lack of data,” Rodriguez-Sanchez wrote. “However, given the increase of corruption in Mexico, many agencies have started to measure it. In addition, other institutions have focused on the measurement of democracy and the rule of law. Using these data, I find that there exists a linear relationship and a negative correlation between democracy and the perception of corruption. In other words, democracy in Mexico reduces the perception of corruption.”

If López Obrador decides to confront autonomous institutions and return to a stronger government role in the economy, he will reduce democracy, thereby causing an increase in corruption in Mexico at the same time, Rodriguez-Sanchez argues. “Indeed, this potential fracture of the Mexican democracy would incentivize more acts of corruption because there would be no institutions to prosecute and prohibit these acts,” he wrote. “In the end, López Obrador will not be able to reduce corruption if he returns to a more centralized political power that affects Mexico’s democracy.”

In recent years, most international and national measures of corruption show an increase in both the perception of corruption and actual corruption in Mexico, Rodriguez-Sanchez said. “The country’s international ranking has deteriorated dramatically, placing it at the bottom in lists of corrupt countries in almost every survey,” he wrote.

Transparency International ranked Mexico 135th out of 180 countries on its Corruption Perceptions Index of 2017. The Americas Society and Council of the Americas and their new Capacity to Combat Corruption Index ranked Mexico as one of the worst countries in Latin America in terms of capacity to combat corruption, above only Venezuela and Guatemala. The World Justice Project placed Mexico at No. 102 out of 113 countries, and it was among the 10 most corrupt countries in the world according to the project’s Rule of Law Index. The World Justice Project also estimated the Rule of Law Index and the absence of corruption for each state in Mexico, with Quintana Roo, Mexico State, Guerrero and Mexico City the most corrupt.

National surveys also confirm that corruption is a major problem within Mexico. The National Institute of Statistics and Geography (INEGI) developed the National Survey of Quality and Government Impact, which showed that Mexicans considered corruption to be the second-most important national concern in 2017, just below security. The National Survey on Regulatory Quality and Government Impact on Enterprises, also conducted by INEGI, found that the costs of corruption for Mexican firms were approximately $84 million in 2016, and 1,317 out of 10,000 large firms experienced at least one corrupt act.

Democracy in Mexico is also weaker than it has been in the last 25 years, Rodriguez-Sanchez said. The Economist Intelligence Unit reported that Mexico’s democracy has been weakening since 2010. The Latin American Public Opinion Project (LAPOP) analyzed the perceptions regarding the protection of basic rights in Mexico as an element of its democracy. According to LAPOP and Latinobarómetro, satisfaction with democracy and public support for democracy are also falling. LAPOP’s surveys found that from 2004 to 2017, democracy – as measured by trust in political parties and perceptions of basic rights and freedom – showed a decrease (with the exception of 2012).

“Indeed, Mexico had one of the lowest levels of rights protections in Latin America,” Rodriguez-Sanchez wrote. “Another example is Freedom House’s analysis, in which Mexico moved from a free country to a partly free country in 2011 due to the deterioration of its political rights and civil liberties. Mexican democracy remains fragile according to the Index of Democratic Development, as calculated by the Konrad-Adenauer-Stiftung.”

In his paper, Rodriguez-Sanchez graphs, tests and uses an econometric model to analyze the various measures, exploring their connections and the relationship between corruption and democracy.

“Although the causal direction of democracy and corruption is normally debated, evidence suggests that highly developed and well-established democracies are perceived as less corrupt,” Rodriguez-Sanchez wrote. “In the case of Mexico … democracy and economic growth reduce the perception of corruption. In other words, more economic growth and democracy result in a lower perception of corruption and hence, a reduction in corruption.”

If it is estimated that the Mexican economy will grow less than 1% in 2019 and less than 2% by 2020, then corruption would not be reduced much in the coming years, Rodriguez-Sanchez said. “Hence, if the government wanted to reduce corruption even more, it would have to improve democracy in the states of Mexico by promoting stronger and more independent institutions.”

Rodriguez-Sanchez concluded, “While it is questionable if Mexico is a well-established democracy, it is certainly a democracy. López Obrador needs to maintain that status and not revert to a centralized government with weak or nonexistent autonomous institutions. If democracy is reduced and so corruption increases, Mexico would be in a no-win situation, and López Obrador would not achieve his goal of reducing corruption at all. On the contrary, he would divert Mexico from being a democracy, which would generate more corruption.”