How institutional failings and electoral incentives fuel corruption
Corruption continues to plague urban centers worldwide, siphoning off valuable public funds, eroding trust in local leadership and undermining critical infrastructure projects. Addressing this problem demands a nuanced understanding of the institutional frameworks that govern cities and the electoral pressures that fuel misconduct. Careful study of the evidence, including research I have done with others, shows that structural weaknesses in government and political polarization jointly create fertile ground for corruption — and suggests what can be done to counter these forces.
Though urban corruption is an ever-present risk, it typically becomes visible through scandals that provoke widespread outrage. Consider the troubled construction of Berlin Brandenburg Airport in Germany. Initially promoted as a state-of-the-art transportation hub, it was repeatedly delayed and over budget, partly due to mismanagement, nepotism in contract awards and alleged bribery. Similarly, the City of Bell, California, provides a telling example: In the mid-2010s, officials awarded themselves staggeringly high salaries — far beyond national norms — financed by disproportionate taxes on local homeowners. The procurement process for constructing stadiums and related infrastructure for the 2014 FIFA World Cup in Brazil and the 2022 FIFA World Cup in Qatar raised serious questions about bribery, inflated contracts and misuse of public funds.
Each of these cases — and the history of corruption in New York, well documented in Vital City — illustrates the tangible costs of corruption: stalled development projects, burdensome tax policies and lost opportunities to invest in essential public services such as health care, education and affordable housing. Plus, there is the intangible cost: public cynicism, warranted or not, about government’s ability to do basic things with integrity and efficiency.
The soil in which corruption grows
To understand why corruption endures, it is critical to examine two core structural facts (beyond simple human greed and other selfish tendencies, which will always be with us): the institutional design of urban government and the patterns of electoral competition that influence political behavior.
Institutional design
Robust institutions — characterized by transparent decision-making, independent oversight and enforceable legal standards — significantly curtail opportunities for corruption. Cities with strong anti-corruption agencies, mandatory public audits and rigorous procurement rules generally find it harder for officials to misappropriate funds or award contracts to favored associates. For example, Singapore’s Corrupt Practices Investigation Bureau and New York City’s Department of Investigation exemplify effective enforcement that deters corruption.
In contrast, in environments where institutional checks are weak or poorly enforced, policymakers and bureaucrats can exploit their authority for personal gain. Corruption thrives where oversight is minimal, record-keeping is opaque and whistleblowers face retaliation.
However, this is not an absolute rule; overly burdensome bureaucratic regulations can sometimes inadvertently incentivize individuals to seek workarounds. Nevertheless, to have any hope of curbing corruption, some regulations, when smartly and effectively enforced, are essential.
Electoral polarization
Urban corruption often flourishes in politically fractured landscapes. High electoral polarization — where urban voters are starkly divided into opposing camps — exacerbates this issue. Politicians under such conditions face intense pressure to reward their loyal constituencies and secure reelection at all costs. In these divided settings, officials are more likely to engage in underhanded methods, including graft and embezzlement, to fund costly campaigns or “buy” local support through favors, patronage or kickbacks.
This situation is primarily the result of horizontal conflict, where fierce competition between rival political factions directly incentivizes corrupt behavior. It’s important to clarify that, while electoral competition can fuel corruption, especially when voters demand very different outcomes from the election winner, this does not imply that less competition inherently leads to less corruption. Indeed, a total lack of political competition could result in even higher levels of corruption.
Political theory helps explain how heightened electoral competition and polarization can lead to increased political rent extraction (meaning, the pocketing of money by people in power). In many cities, political candidates promise public goods — improved infrastructure, better schools and safer streets — funded through taxation. Yet the act of collecting taxes itself creates opportunities for abuse. Once tax revenues exceed the actual cost of delivering the promised services, the surplus can be quietly diverted. Politicians in fiercely contested elections may intentionally propose high tax rates to generate secret “slush funds,” using these rents for their campaigns or personal enrichment.
Several factors can amplify this problem. In a city with dramatic income disparities, politicians can impose taxes that disproportionately burden wealthier or politically marginalized groups. Carefully manipulating these policies can produce surplus revenues hidden from public scrutiny.
When election outcomes are unpredictable, candidates hedge their bets by overcollecting revenue. By inflating the budget “requirements” for promised projects, they can stash away funds for future use. This tactic is easier to execute when no single faction dominates the electorate, making it harder for voters to identify who is responsible for broken promises and missing public funds.
So, how to curb it?
Understanding the combined pressures of institutional frailty and electoral polarization points to a few possible reforms:
● Strengthen institutional mechanisms. Introducing independent anti-corruption agencies with the power to investigate and prosecute malpractice — like the federal government’s Government Accountability Accounting Office or New York City’s Department of Investigation — is crucial. Regular public audits of municipal expenditures, transparent procurement guidelines and whistleblower protection laws help ensure that suspicious activities are detected and punished. In cities like Hong Kong, establishing an Independent Commission Against Corruption in 1974 proved instrumental in curbing what had been widespread malfeasance in public contracts.
● Reduce electoral polarization. Easing the intense rivalries that often accompany elections can also help mitigate corruption. Effective strategies include implementing redistricting reforms for fair representation, establishing transparent campaign finance rules and adopting systems like proportional or ranked-choice voting. These changes can alter the incentives for candidates, encouraging them to campaign on genuine platforms instead of relying on illicit funds. Cities like San Francisco and Minneapolis have successfully implemented ranked choice voting, which has contributed to a more issue-focused political climate where policy competition, rather than corruption, guides the path to electoral victory.
Urban corruption may be common, but it is not inevitable. It flourishes where institutional safeguards falter and electoral incentives encourage wrongdoing. By reinforcing accountability structures and adopting electoral policies that reduce polarization, cities can limit political rent extraction and direct their resources where they belong: toward the well-being and prosperity of the communities they serve.