This study highlights, for the first time in the literature on the subject in Puerto Rico, the leadership role of the administrative head, based on the analysis of in-depth, anonymous interviews with ten officials with broad experience and recognition in government management. The Agency Head is an important ally and a fundamental component of a comprehensive strategy against corruption and for the protection of the public good. The Agency Head has the potential to exert great influence over government processes and to implement effective strategies for the prevention and control of corruption.
This paper makes an empirical estimate of the macroeconomic cost of corruption on Puerto Rico's economic growth. It identifies the various economic and social costs of corruption and the discrepancies in the economic literature on the subject. The results of the econometric model show that the effect of corruption in the public sector only affects budget allocations from the General Fund and consequently the size of the Government. It concludes that corruption has not had a statistically significant effect on the growth of Puerto Rico's real Gross Domestic Product for the fiscal period 1951-52 to 2007-08. It is also evidenced that Puerto Rico's economy is extremely dependent on the U.S. economy, with little or no influence from economic variables determined within the country. The macroeconomic variables that have the greatest effect on Puerto Rico's economic growth are determined in the United States, among them: federal transfers, oil prices and the economic growth of the United States.
This study documents the forms of public corruption in Puerto Rico that involve the business sector. There are three main ways through which the private sector participates in public corruption: (1) paying officials to guarantee privileges in laws, decisions and regulations; (2) paying officials to be favored in the awarding of contracts; and (3) paying money to officials or exchanging favors to expedite transactions such as obtaining permits and licenses.
Public procurement is an important economic activity in Puerto Rico, and corruption pushes aside many companies while privileging a few.
The best-known corruption cases in Puerto Rico involve the awarding of contracts by officials in exchange for money. But this is only one of the many forms corruption can take. This study uses data from a survey on public employees' perceptions of the misuse of government funds. This is to document the various forms of corruption and examine the factors that influence the amount of irregularities in agencies. Among the main findings are that: personnel appointments and the awarding of contracts show the highest frequency of irregularities; (2) corruption in Puerto Rico is closely linked to partisan politics and affects a wide range of aspects of public management; (3) irregularities increase with the size of the agency and are lower in agencies with good management practices; (4) no significant perception of corruption was found in the provision of public services or in procurement and supply processes.
