Compliance and “Leakages” in International Regimes: The Case of the OECD Anti-Bribery Convention

Compliance with an international regime may be partial, and partial compliance may have counterproductive effects when it encourages “leakages,” that is, behaviors in contrast with the desired effects of the regime. A widely researched case regards policies aimed at abating greenhouse gases, which, when successful at home, may lead to increased emissions abroad, both following gains loss of market share by domestic firms, and the relocation of their activities in countries that are not participant to the regime. We research this broad theme with respect to the anti-corruption international regime defined by the OECD Anti-bribery Convention of 1998, which led to the criminalization of bribes to foreign officials also in the home jurisdiction. Under this regime, leakages may take the form of increases in the propensity to bribe by firms that are headquartered in non-complying countries and take advantage of the increased constraints facing competitors from complying countries. Quantitative studies on corruption are notoriously marred by a dearth of trustworthy data. We use a dataset of observed cases of cross-border bribes that lends itself to a creative assessment of propensities to bribe abroad, and apply both recent difference-in-difference estimator and regressions models. We find evidence both of compliance, and of leakages, following the intensified enforcement of the international regime that occurred in the years following 2010.