This paper presents a randomized field experiment on reducing corruptionin over 600 Indonesian village road projects. I find that increasinggovernment audits from 4 percent of projects to 100 percentreduced missing expenditures, as measured by discrepancies betweenofficial project costs and an independent engineers' estimate of costs,by eight percentage points. By contrast, increasing grassroots participationin monitoring had little average impact, reducing missing expendituresonly in situations with limited free-rider problems andlimited elite capture. Overall, the results suggest that traditional topdownmonitoring can play an important role in reducing corruption,even in a highly corrupt environment.
Journal of Political Economy
January 01, 2007