Corruption and the Institutional Environment for Growth
AbstractSeveral cross-country studies have found that corruption is detrimental to economic growth, but the findings are not universally robust. We utilize the economic freedom index to examine if corruption can facilitate growth by allowing entrepreneurs to avoid inefficient policies and regulations when economic freedom is limited. Using regression analysis, we find that corruption is growth enhancing when economic freedom is most limited but the beneficial impact of corruption decreases as economic freedom increases. Not all areas of economic freedom affect the corruption–growth relationship equally. In particular, we find the beneficial effect of corruption disappears most quickly when the size of government and the extent of regulation decrease.
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Bibliographic InfoArticle provided by Palgrave Macmillan in its journal Comparative Economic Studies.
Volume (Year): 52 (2010)
Issue (Month): 3 (September)
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Other versions of this item:
- Heckelman, Jac C. & Powell, Benjamin, 2008. "Corruption and the Institutional Environment for Growth," Working Papers 2008-6, Suffolk University, Department of Economics.
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- H10 - Public Economics - - Structure and Scope of Government - - - General
- O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
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