Anti-Corruption Action Reduces Cost of Capital Spending in Milan

• Pages: 375

Page 375

For years, Italy recorded one of the largest shares of capital spending in GDP among the OECD countries, until a huge corruption scandal in the early 1990s, nicknamed "tangentopoli" (bribe city), toppled the governing party that had ruled the country for several decades. After the scandal broke and several prominent individuals were sent to jail, capital spending fell sharply. This fall, according to Tanzi and Davoodi, was evidently attributable to a sharp reduction in the number of capital projects undertaken-and, perhaps more important-by a sharp fall in the costs of those projects still underway. Citing data released by Transparency International, a nongovernmental organization that traces worldwide corruption, the authors report...