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Why is corruption less harmful in some countries than in others?

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  • Blackburn, Keith
  • Forgues-Puccio, Gonzalo F.

Abstract

Empirical evidence shows that not all countries with high levels of corruption have suffered poor growth performance. Bad quality governance has clearly been much less damaging (if at all) in some economies than in others. Why this is so is a question that has largely been ignored, and the intention of this paper is to provide an answer. We develop a dynamic general equilibrium model in which growth occurs endogenously through the invention of new goods based on research and development activity. For such activity to be undertaken, firms must acquire complementary licenses from public officials who are able to exploit their monopoly power by demanding bribes in exchange for these (otherwise free) permits. We show that the effects of corruption depend on the extent to which bureaucrats coordinate their rent-seeking behaviour. Specifically, our analysis predicts that countries with organised corruption networks are likely to display lower levels of bribes, higher levels of research activity and higher rates of growth than countries with disorganised corruption arrangements.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 72 (2009)
Issue (Month): 3 (December)
Pages: 797-810

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Handle: RePEc:eee:jeborg:v:72:y:2009:i:3:p:797-810

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Keywords: Organised corruption Disorganised corruption Innovation Growth;

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References

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Citations

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Cited by:
  1. Dzhumashev, Ratbek, 2014. "Corruption and growth: The role of governance, public spending, and economic development," Economic Modelling, Elsevier, vol. 37(C), pages 202-215.
  2. repec:pdn:wpaper:79 is not listed on IDEAS
  3. Keith Blackburn & Gonzalo F. Forgues-Puccio, 2008. "Financial Liberalisation, Bureaucratic Corruption and Economic Development," Development Research Working Paper Series 06/2008, Institute for Advanced Development Studies.
  4. Antonio Andres & Carlyn Ramlogan-Dobson, 2011. "Is Corruption Really Bad for Inequality? Evidence from Latin America," Journal of Development Studies, Taylor & Francis Journals, vol. 47(7), pages 959-976.
  5. Raul Gouvea & Jonathan Linton & Manuel Montoya & Steven Walsh, 2012. "Emerging Technologies and Ethics: A Race-to-the-Bottom or the Top?," Journal of Business Ethics, Springer, vol. 109(4), pages 553-567, September.
  6. Maria Cristina Molinari, 2011. "Corruption in Privatization and Governance Regimes," Working Papers 201_28, Department of Economics, University of Venice "Ca' Foscari".
  7. Pál Csapodi & István Takács & Katalin György-Takács, 2011. "Corruption as a Deviant Social Attitude," Public Finance Quarterly, State Audit Office of Hungary, vol. 56(1), pages 27-43.
  8. Gonzalo F. Forgues-Puccio & Ibrahim M. Okumu, 2012. "Does Size Matter? Scale, Corruption and Uncertainty," CDMA Working Paper Series 201207, Centre for Dynamic Macroeconomic Analysis.
  9. Wang, Yuanyuan & You, Jing, 2012. "Corruption and firm growth: Evidence from China," China Economic Review, Elsevier, vol. 23(2), pages 415-433.
  10. Ingmar Schumacher, 2012. "Political Stability, Corruption and Trust in Politicians," Working Papers hal-00763327, HAL.
  11. Sajid Bashir & Misbah Nasir & Saira Qayyum & Ambreen Bashir, 2012. "Dimensionality of Counterproductive Work Behaviors in Public Sector Organizations of Pakistan," Public Organization Review, Springer, vol. 12(4), pages 357-366, December.
  12. Eugen Dimant, 2013. "The Nature of Corruption - An Interdisciplinary Perspective," Working Papers CIE 70, University of Paderborn, CIE Center for International Economics.
  13. Dobson, Stephen & Ramlogan-Dobson, Carlyn, 2012. "Why is Corruption Less Harmful to Income Inequality in Latin America?," World Development, Elsevier, vol. 40(8), pages 1534-1545.
  14. Kuloglu, Ayhan & Lobont, Oana-Ramona & Topcu, Mert, 2012. "A question of causality between political corruption, economic freedom and economic growth in Europe," MPRA Paper 40365, University Library of Munich, Germany.

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