Corruption, State Capture and Informal Institutions in the Public Sector in Latin America: The Case of Chile

This paper makes several contributions to the existing literature on corruption and informal institutions in the public sector in Latin America, using the case of Chile as an example, a country where corruption in the political arena associates with practices of elected officers to reproduce themselves in power rather than personal enrichment. Addressing the question about how social and political transformations impact institutional and structural corruption, and based on the theoretical framework laid out by Helmke and Levitsky, we analyse the compared outcomes of corrupt practices at the local, regional and national level. We extend the list of commonly analysed informal institutions to mechanisms that have not been considered from these perspectives before, such as campaign finance arrangements, rules of public appointment, nepotism, transversal arrangements, informal decisions or clientelism, as well as their impact on social inclusion of lower and middle classes. Second, we examine the dynamic nature of these informal institutions and their operation in six different social and geographic backgrounds, analyzing how the transparency laws applied since 2015 impact on political practices in an environment of low institutional trust and high corruption perception. Finally, following Granovetter’s approach on corruption and its embeddedness in social relations, we show that similar practices in different contexts may or may not be corrupt: in some cases they allow part of the population to solve their problems while in other areas, they foster resource concentration in local caudillos’ hands. Our research reveals that informal institutions shape politics and policies as well, but have similarly helped grease the wheels of post-authoritarian politics in Chile and supply social benefits to lower classes. We use data from legislative debates and 130 interviews to experts and local, regional and national actors conducted in the last two years in six territories of the country (Fondecyt project).