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Does corruption grease or sand the wheels of growth?

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Author Info
Pierre-Guillaume Méon ()
Khalid Sekkat ()

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Abstract

This paper assesses the relationship between the impact of corruption on growth and investment and the quality of governance in a sample of 63 to 71 countries between 1970 and 1998. Like previous studies, we find a negative effect of corruption on both growth and investment. Unlike previous studies, we find that corruption has a negative impact on growth independently from its impact on investment. These impacts are, however, different depending on the quality of governance. They tend to worsen when indicators of the quality of governance deteriorate. This supports the “sand the wheels” view on corruption and contradicts the “grease the wheels” view, which postulates that corruption may help compensate bad governance. Copyright Springer Science + Business Media, Inc. 2005

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File URL: http://hdl.handle.net/10.1007/s11127-005-3988-0
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Publisher Info
Article provided by Springer in its journal Public Choice.

Volume (Year): 122 (2005)
Issue (Month): 1 (January)
Pages: 69-97
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Handle: RePEc:kap:pubcho:v:122:y:2005:i:1:p:69-97

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  15. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May. [Downloadable!] (restricted)
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  16. Aymo Brunetti & Beatrice Weder, 1998. "Investment and institutional uncertainty: A comparative study of different uncertainty measures," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 134(3), pages 513-533, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Frank Bohn, 2004. "White Elephants and the Limits to Efficient Investment," Working Papers 200413, School Of Economics, University College Dublin. [Downloadable!]
  2. Aidt, T.S., 2009. "Corruption, Institutions and Economic Development," Cambridge Working Papers in Economics 0918, Faculty of Economics, University of Cambridge. [Downloadable!]
    Other versions:
  3. Frank Bohn, 2005. "Public Investment under Ethnic Diversity and Political Uncertainty," Working Papers 200501, School Of Economics, University College Dublin. [Downloadable!]
  4. Axel Dreher & Martin Gassebner, 2007. "Greasing the Wheels of Entrepreneurship? The Impact of Regulations and Corruption on Firm Entry," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  5. Toke Aidt & Jayasri Dutta & Vania Sena, 2006. "Governance Regimes, Corruption and Growth: Theory and Evidence," Discussion Papers 15_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy. [Downloadable!]
    Other versions:
  6. Pierre-Guillaume Méon & Khalid Sekkat, 2006. "Institutional quality and trade: which institutions? which trade?," Working Papers DULBEA 06-06.RS, Université libre de Bruxelles, Department of Applied Economics (DULBEA). [Downloadable!]
    Other versions:
  7. Heckelman, Jac C. & Powell, Benjamin, 2008. "Corruption and the Institutional Environment for Growth," Working Papers 2008-6, Suffolk University, Department of Economics. [Downloadable!]
  8. Goel, Rajeev K. & Nelson, Michael A., 2008. "Causes of Corruption:History, Geography, and Government," BOFIT Discussion Papers 6/2008, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  9. Monica Escaleras & Nejat Anbarci & Charles Register, 2007. "Public sector corruption and major earthquakes: A potentially deadly interaction," Public Choice, Springer, vol. 132(1), pages 209-230, July. [Downloadable!] (restricted)
  10. Axel Dreher & Thomas Herzfeld, 2005. "The Economic Costs of Corruption: A Survey and New Evidence," Public Economics 0506001, EconWPA. [Downloadable!]
  11. Weill, Laurent, 2008. "How corruption affects bank lending in Russia," BOFIT Discussion Papers 18/2008, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
    Other versions:
  12. Akarca, Ali T. & Tansel, Aysit, 2008. "Impact of the 1999 Earthquakes on the Outcome of the 2002 Parliamentary Election in Turkey," IZA Discussion Papers 3466, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  13. Keith Blackburn & Rashmi Sarmah, 2006. "Red Tape, Corruption and Finance," Centre for Growth and Business Cycle Research Discussion Paper Series 82, Economics, The Univeristy of Manchester. [Downloadable!]
  14. Olivier Armantier & Amadou Boly, 2008. "Can Corruption Be Studied in the Lab? Comparing a Field and a Lab Experiment," CIRANO Working Papers 2008s-26, CIRANO. [Downloadable!]
  15. Keith Blackburn & Niloy Bosey & Salvatore Capasso, 2008. "Living With Corruption: Threshold Effects in Red Tape and Rent Seeking," Working Papers 4_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy. [Downloadable!]
  16. Monica Escaleras & Nejat Anbarci & Charles Register, 2006. "Public Sector Corruption and Natural Disasters: A Potentially Deadly Interaction," Working Papers 06005, Department of Economics, College of Business, Florida Atlantic University, revised Aug 2006. [Downloadable!]
  17. Gorodnichenko, Yuriy & Sabirianova, Klara, 2006. "Public Sector Pay and Corruption: Measuring Bribery from Micro Data," CEPR Discussion Papers 5585, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  18. Weill, Laurent, 2009. "Does corruption hamper bank lending? Macro and micro evidence," BOFIT Discussion Papers 3/2009, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
    Other versions:
  19. Keith Blackburn & Rashmi Sarmah, 2006. "Red Tape, Corruption and Finance," The School of Economics Discussion Paper Series 0639, Economics, The University of Manchester. [Downloadable!]
  20. Keith Blackburn & Gonzalo F. Forgues-Puccio, 2007. "Why is Corruption Less Harmful in Some Countries Than in Others?," Centre for Growth and Business Cycle Research Discussion Paper Series 88, Economics, The Univeristy of Manchester. [Downloadable!]
  21. Antonio Acconcia, 2006. "Endogenous Corruption and Tax Evasion in a Dynamic Model," CSEF Working Papers 154, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Nov 2006. [Downloadable!]
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