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Endogenous Corruption, Inequality and Growth: Econometric Evidence

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Author Info

  • Raul A. Barreto

    ()
    (School of Economics, University of Adelaide)

Abstract

This paper empirically addresses three questions. First, what is corruption's effect on economic growth? Second, what are the factors that determine corruption? Third, what is the relationship among corruption, economic growth, and income distribution? I use a cross section of countries, both developed and underdeveloped. I find that corruption is an important determinant of both per-capita real growth and of the distribution of income. Corruption is positively and significantly correlated with growth, implying that corruption has efficiency-enhancing qualities. Corruption is positively and significantly correlated with inequality, implying that increased income inequality is associated with greater corruption. The most robust specification, which associates three jointly dependent equations using a two-stage least squares estimation technique, reinforces the proposition that corruption enhances efficiency, justifies inequality's role in determining growth rates, and lends support to the theory of international convergence of growth rates.

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File URL: http://www.economics.adelaide.edu.au/research/papers/doc/wp2001-02.pdf
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Bibliographic Info

Paper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2001-02.

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Length: 37 pages
Date of creation: 2001
Date of revision:
Handle: RePEc:adl:wpaper:2001-02

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Postal: Adelaide SA 5005
Phone: (618) 8303 5540
Web page: http://www.economics.adelaide.edu.au/
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Related research

Keywords: endogenous growth; corruption;

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References

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  1. Bourguignon, F. & Morrisson, C., 1989. "Income Distribution, Development and Foreign Trade: A Cross-Sectional Analysis," DELTA Working Papers 89-05, DELTA (Ecole normale supérieure).
  2. Barro, Robert J, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 407-43, May.
  3. Rodrik, Dani & Alesina, Alberto, 1994. "Distributive Politics and Economic Growth," Scholarly Articles 4551798, Harvard University Department of Economics.
  4. Park, Walter G & Brat, David A, 1995. "A Global Kuznets Curve?," Kyklos, Wiley Blackwell, vol. 48(1), pages 105-31.
  5. Borsu, A. & Glejser, H., 1992. "Do protection, schooling, product per head and income distribution influence growth? : A cross sectional analysis," European Economic Review, Elsevier, vol. 36(6), pages 1235-1239, August.
  6. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
  7. Fields, Gary S, 1989. "Changes in Poverty and Inequality in Developing Countries," World Bank Research Observer, World Bank Group, vol. 4(2), pages 167-85, July.
  8. Summers, Robert & Heston, Alan, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 327-68, May.
  9. Adelman, Irma & Robinson, Sherman, 1989. "Income distribution and development," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 2, chapter 19, pages 949-1003 Elsevier.
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Citations

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Cited by:
  1. mamoon, dawood, 2011. "Economic Security, Well Functioning Courts and a Good Government," MPRA Paper 30570, University Library of Munich, Germany.
  2. Eatzaz Ahmad & Muhammad Aman Ullah & Muhammad Irfanullah Arfeen, 2012. "Does Corruption Affect Economic Growth?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 49(2), pages 277-305, November.
  3. Axel Dreher & Thomas Herzfeld, 2005. "The Economic Costs of Corruption: A Survey and New Evidence," Public Economics 0506001, EconWPA.

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