Does Social Media Reduce Corruption?

In this paper we study the impact of multi-way means of communication on corruption by exploring the relationship between social media and corruption. Our cross-country analysis of over 150 countries shows that Facebook penetration (a proxy for social media) has a negative and economically sizable impact on corruption. Using a novel dataset on technological adoption, we exploit variations in cross-country technological adoption in the field of communication in 1500 AD to address endogeneity concerns. We then provide suggestive evidence which shows that the effects of social media are not contingent on freedom of the press; social media can impact corruption both in countries where press is free and where it is repressed. Our findings also confirm the negative relationship between internet penetration and corruption. Finally, a falsification test for the relationship between Facebook penetration and corruption is also reported