08 December 2020
International Development PhD student awarded Mexico's National Prize of Public Finance 2020
Eduardo Ortiz-Juarez was awarded the National Prize of Public Finance 2020, delivered by the Centre for Public Finance Studies (CEFP), the think tank of Mexico’s Chamber of Deputies (Congress of the Union).
Government corruption has an adverse effect on poverty rates and average per capita income in Mexico’s municipalities, diverting federal funds away from much needed infrastructural development and social assistance and disproportionately affecting the poorest households.
These findings, the product of award-winning research conducted by Eduardo Ortiz-Juarez (King’s) and María Montoya Aguirre and L. Guillermo Woo-Mora (Paris School of Economics), provide empirical evidence for the consequences of Mexico’s municipal governments’ misuse of funds.
By utilising a panel dataset on the misuse of federal transfers for social assistance and infrastructure together with indicators of well-being and political affiliation at the municipal level, the researchers published three main results:
- The misuse of federal funds by the state government significantly increases the incidence of poverty, particularly extreme poverty. A critical finding is that the effect of corruption is unambiguously regressive, meaning it disproportionately affects the poorest households within the municipalities.
- Beyond the disproportionate effect on the poorest households within a given municipality, the adverse effect of misused or diverted funds fall harder on the poorest 20 percent of municipalities in Mexico —although such adverse impacts are also observed in richer municipalities.
- Corruption most severely affects those municipalities governed by political parties that are not aligned with the state and federal government.
Mexico’s National Prize of Public Finance, delivered annually since 2008, recognises outstanding research on current issues in economics and public finance in the country from both theoretical and empirical perspectives.
In addition to winning the award, Ortiz-Juarez and his co-authors’ paper will be published in the Centre’s Journal of Public Finance in January 2021.