In Italy, for example, power from wind farms is sold at a guaranteed rate of 180 Euros per kwh, the highest rate in the world. In a country where the Mafia has years of expertise at buying corrupt politicians and intimidating rivals, the result is perhaps inevitable, creating a new breed of entrepreneurs known as the lords of the wind. (The Telegraph 2010).
If you [an energy company] are interested in investing in Calabria, I can reassure you that it will be like a highway without toll gates. Wiretapping of an ongoing judicial inquiry about wind power (Corriere della Sera 2012).
1 Introduction
2 A simple theory of corruption in the renewable energy sector
3 Background and data
3.1 Wind power in Italy
3.2 Data description
Variables | Mean | Min | Max | Obs. |
---|---|---|---|---|
Crim Assoc | 2.277 | 0 | 13.843 | 612 |
(1.775) | ||||
TCrim Assoc | 3.034 | 0 | 13.843 | 612 |
(2.342) | ||||
Violent crime Index | 115.018 | 14.017 | 558.863 | 612 |
(72.496) | ||||
Clear_Up | 0.332 | 0.094 | 0.721 | 476 |
(0.115) | ||||
Wind_Index | 1.227 | 0.211 | 3.469 | 612 |
(0.95) | ||||
Wind Plants | 2.236 | 0 | 44 | 612 |
(4.848) | ||||
Capacity (MW) | 18.123 | −0.6 | 642.17 | 612 |
(54.356) | ||||
GDP_pc (Log) | 9.490 | 8.941 | 10.134 | 612 |
(0.184) | ||||
School | 0.814 | 0.355 | 1.17 | 612 |
(0.12) | ||||
Population | 609,323 | 89,043 | 3,117,095 | 612 |
(54,4902.4) | ||||
Pop_Density | 176.778 | 30.87 | 1881.168 | 612 |
(299.849) |
3.3 Measurement issues
4 Methodology and results
4.1 Suggestive evidence: corruption and wind energy development
VARIABLES | (1) Capacity (MW) | (2) Capacity (MW) | (3) Capacity (MW) | (4) Capacity(MW) |
---|---|---|---|---|
Stock_Capacity\(_{{\mathrm{t}}-1}\)
| 0.025 | 0.028 | 0.014 | 0.018 |
(0.095) | (0.096) | (0.106) | (0.108) | |
Lag CrimAssoc | 0.797* | 0.263 | 2.381** | 0.542 |
(0.462) | (0.291) | (1.067) | (1.462) | |
inter_CrimAssoc | 0.996* | 2.458**
| ||
(0.571) | (1.006) | |||
Controls | Yes | Yes | Yes | Yes |
Province and Year FE | Yes | Yes | Yes | Yes |
Observations | 578 | 578 | 323 | 323 |
R-squared | 0.497 | 0.500 | 0.525 | 0.258 |
Number of prov_id | 34 | 34 | 19 | 19 |
4.2 Empirical analysis: wind resource and corruption
4.2.1 Difference in difference: windy vs non windy provinces
Treated provinces (mean) | Non-treated provinces (mean) | Mean difference (p value) | |
---|---|---|---|
(1) | (2) | (3) | |
(A) Province characteristics before 1999 | |||
CrimAssoc | 1.371 | 2.147 | 0.155 |
(0.592) | (1.153) | ||
TCrimAssoc | 1.681 | 2.735 | 0.04 |
(0.676) | (1.549) | ||
Violent crime Index | 64.571 | 117.773 | 0.02 |
(18.274) | (71.954) | ||
Clear_Up | 0.343 | 0.357 | 0.396 |
(0.121) | (0.108) | ||
Wind_Index | 2.742 | 1.04 | 0 |
(0.584) | (0.408) | ||
Wind Plants | 2.937 | 0.136 | 0 |
(2.363) | (0.258) | ||
Capacity (MW) | 9.942 | 0.351 | 0.02 |
(15.184) | (0.826) | ||
GDP_pc | 9.463 | 9.399 | 0.135 |
(0.126) | (0.113) | ||
School | 0.814 | 0.777 | 0.151 |
(0.065) | (0.079) | ||
Pop Density | 91.525 | 289.723 | 0.311 |
(33.148) | (532.213) | ||
(B) Province characteristics after 1998 | |||
CrimAssoc | 1.896 | 1.962 | 0.449 |
(1.394) | (0.838) | ||
TCrimAssoc | 2.355 | 2.587 | 0.346 |
(1.392) | (1.126) | ||
Violent crime Index | 99.994 | 149.669 | 0.101 |
(22.272) | (103.49) | ||
Clear_Up | 0.324 | 0.319 | 0.442 |
(0.078) | (0.072) | ||
Wind_Index | 2.742 | 1.04 | 0 |
(0.584) | (0.408) | ||
Wind Plants | 8.678 | 1.233 | 0.001 |
(7.236) | (1.229) | ||
Capacity (MW) | 76.127 | 10.064 | 0.006 |
(78.579) | (12.891) | ||
GDP_pc | 9.507 | 9.498 | 0.438 |
(0.076) | (0.150) | ||
School | 0.907 | 0.874 | 0.135 |
(0.042) | (0.072) | ||
Pop_Density | 90.401 | 289.395 | 0.152 |
(32.598) | (528.014) | ||
Obs. | 8 | 11 |
VARIABLES | (1) CrimAssoc | (2) CrimAssoc | (3) TCrimAssoc | (4) TCrimAssoc |
---|---|---|---|---|
TG\(_{91\_ 94}\)
| 0.221 | 0.690 | ||
(0.601) | (0.712) | |||
(0.638) | (0.824) | |||
TG\(_{95\_98}\)
| 0.298 | 0.853 | ||
(0.689) | (0.707) | |||
(0.871) | (1.003) | |||
TG\(_{99\_02}\)
| 1.266 | 0.892 | 2.094 | 1.030 |
(0.962) | (0.415)** | (1.078)* | (0.521)* | |
(1.198) | (0.440)* | (1.355) | (0.491)** | |
TG\(_{03\_07}\)
| 2.257 | 1.785 | 3.305 | 1.979 |
(1.265)* | (0.492)*** | (1.539)** | (0.688)** | |
(1.631) | (0.677)** | (1.834)* | (0.781)** | |
Controls | Yes | Yes | Yes | Yes |
Province and year FE | Yes | Yes | Yes | Yes |
Observations | 342 | 342 | 342 | 342 |
R\(^{2}\)
| 0.325 | 0.325 | 0.303 | 0.301 |
Number of prov id | 19 | 19 | 19 | 19 |
Ho
| p value | Ho
| p value |
---|---|---|---|
CrimAssoc | TCrimAssoc | ||
Cluster SE | Cluster SE | ||
TG\(_{91\_ 94} =\) TG\(_{95\_ 98}\)
| 0.8664 | TG\(_{91\_94} =\) TG\(_{95\_ 98}\)
| 0.7889 |
TG\(_{95\_98} =\) TG\(_{99\_02}\)
| 0.0505 | TG\(_{95\_ 98} =\) TG\(_{99\_ 02}\)
| 0.0503 |
TG\(_{95\_98} =\) (TG\(_{99\_02}\, +\) TG\(_{03\_ 07})/2\)
| 0.0123 | TG\(_{95\_ 98} =\) (TG\(_{99\_ 02}\, +\) TG\(_{03\_ 07})/2\)
| 0.0222 |
(TG\(_{91{\_}94}\, +\) TG\(_{95{\_}98)/2 =}\)(TG\(_{99{\_}02}+\) TG\(_{03{\_}07})/2\)
| 0.0393 | (TG\(_{91\_94}\) + TG\(_{95\_98})/2\,=\,\) (TG\(_{99{\_}02} \,+\) TG\(_{03{\_}07})/2\)
| 0.062 |
Bootstrapped SE | Bootstrapped SE | ||
TG\(_{91\_ 94} =\) TG\(_{95\_ 98}\)
| 0.8808 | TG\(_{91\_ 94} =\) TG\(_{95\_ 98}\)
| 0.7734 |
TG\(_{95\_ 98} =\) TG\(_{99\_ 02}\)
| 0.0577 | TG\(_{95\_ 98} =\) TG\(_{99\_ 02}\)
| 0.0288 |
TG\(_{95\_ 98} =(\) TG\(_{99 \_02} \,+\,\)TG\(_{03 07})/2\)
| 0.0316 | TG\(_{95\_ 98} =\) (TG\(_{99\_ 02}\,\)+ TG\(_{03\_ 07})/2\)
| 0.0161 |
(TG\(_{91\_ 94}\, +\,\)TG\(_{95{\_}98})/2 =\)(TG\(_{99\_02} +\)TG\(_{03\_07}/2\)
| 0.0814 | (TG\(_{91\_ 94} \,+\,\)TG\(_{95\_98})/2=\)(TG\(_{99\_ 02}\, +\,\) TG\(_{03\_ 07})/2\)
| 0.0454 |
VARIABLES | (1) CrimAssoc | (2) CrimAssoc | (3) TCrimAssoc | (4) TCrimAssoc |
---|---|---|---|---|
TG\(_{99{\_}00}\)
| 0.980 | 0.937 | ||
(0.548)* | (0.643) | |||
(0.519)* | (0.568)* | |||
TG\(_{01{\_}02}\)
| 1.005 | 1.152 | ||
(0.435)** | (0.552)* | |||
(0.604)* | (0.694)* | |||
TG\(_{03{\_}04}\)
| 1.730 | 2.063 | ||
(0.473)*** | (0.630)*** | |||
(0.703)** | (0.806)** | |||
TG\(_{05{\_}07}\)
| 2.098 | 1.964 | ||
(0.776)** | (0.992)* | |||
(0.988)** | (1.097)* | |||
POST\(_{99{\_}05}\)
| 0.867** | 0.997** | ||
(0.356) | (0.394) | |||
Controls | Yes | Yes | Yes | Yes |
Province and year FE | Yes | Yes | Yes | Yes |
Observations | 342 | 38 | 342 | 38 |
R\(^{2}\)
| 0.326 | 0.522 | 0.301 | 0.450 |
Number of prov_id | 19 | 19 | 19 | 19 |
4.2.2 Robustness
4.2.2.1 Catching-up between treatment and control?
Variables | (1) | (2) | (3) | (4) |
---|---|---|---|---|
Violent crime index | Violent crime index | Violent crime index | Violent crime index | |
TG\(_{91{\_}94}\)
| 0.106 | |||
(0.144) | ||||
(0.175) | ||||
TG\(_{95{\_}98}\)
| −0.006 | |||
(0.168) | ||||
(0.208) | ||||
TG\(_{99{\_}02}\)
| −0.053 | −0.037 | ||
(0.226) | (0.095) | |||
(0.273) | (0.101) | |||
TG\(_{03{\_}07}\)
| −0.175 | −0.118 | ||
(0.253) | (0.179) | |||
(0.356) | (0.147) | |||
TG\(_{99\_00}\)
| −0.032 | |||
(0.104) | ||||
(0.106) | ||||
TG\(_{01\_ 02}\)
| 0.011 | |||
(0.141) | ||||
(0.133) | ||||
TG\(_{03{\_}04}\)
| −0.116 | |||
(0.181) | ||||
(0.161) | ||||
TG\(_{05{\_}07}\)
| −0.043 | |||
(0.284) | ||||
(0.185) | ||||
POST\(_{99{\_}05}\)
| −0.022 | |||
(0.147) | ||||
Controls | Yes | Yes | Yes | Yes |
Province and year FE | Yes | Yes | Yes | Yes |
Observations | 342 | 342 | 342 | 38 |
R\(^{2}\)
| 0.804 | 0.803 | 0.803 | 0.614 |
Number of prov_id | 19 | 19 | 19 | 19 |
VARIABLES | (1) CrimAssoc | (2) CrimAssoc | (3) TCrimAssoc | (4) TCrimAssoc |
---|---|---|---|---|
TG\(_{91\_ 94}\)
| −0.044 | 0.591 | ||
(0.578) | (0.656) | |||
(0.692) | (0.880) | |||
TG\(_{95\_ 98}\)
| −0.091 | 0.669 | ||
(0.748) | (0.813) | |||
(0.961) | (1.114) | |||
TG\(_{99\_ 02}\)
| 0.725 | 0.833 | 1.614 | 0.832 |
(0.985) | (0.418)* | (1.160) | (0.487) | |
(1.216) | (0.547) | (1.425) | (0.604) | |
TG\(_{03\_ 07}\)
| 1.709 | 1.850 | 2.869 | 1.922 |
(1.326) | (0.456)*** | (1.622)* | (0.647)*** | |
(1.671) | (0.736)** | (1.899) | (0.836)** | |
GDP_TG | −1.547 | −1.535 | −0.700 | −1.235 |
(1.763) | (1.926) | (2.126) | (2.516) | |
(2.263) | (2.021) | (2.467) | (2.306) | |
PopDens_TG | −0.091 | −0.095 | −0.217 | −0.195 |
(0.141) | (0.130) | (0.109)* | (0.098)* | |
(0.207) | (0.189) | (0.214) | (0.202) | |
Sch TG | 7.595 | 7.360 | 7.076 | 8.436 |
(5.271) | (4.896) | (6.277) | (5.730) | |
(6.619) | (6.012) | (6.970) | (6.230) | |
Controls | Yes | Yes | Yes | Yes |
Province and year FE | Yes | Yes | Yes | Yes |
Observations | 342 | 342 | 342 | 342 |
R\(^{2}\)
| 0.330 | 0.330 | 0.309 | 0.308 |
Number of prov_id | 19 | 19 | 19 | 19 |