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Corruption and economic growth in Lebanon

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  • Farida, Moe
  • Ahmadi-Esfahani, Fredoun Z.
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    Abstract

    This paper seeks to examine the impact of corruption on economic growth in Lebanon. Using a neoclassical model, we hypothesise that corruption reduces the country's standard of living as measured by real per capita GDP. We show that corruption deters growth indirectly through reducing the factor input productivity in a Cobb-Douglas production function. We provide empirical evidence suggesting that corruption increases inefficiencies in government expenditure and reduces investment and human capital productivity, leading to a negative impact on output. The implications of the analysis are explored.

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    File URL: http://purl.umn.edu/6043
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    Bibliographic Info

    Paper provided by Australian Agricultural and Resource Economics Society in its series 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia with number 6043.

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    Date of creation: 2008
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    Handle: RePEc:ags:aare08:6043

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    Related research

    Keywords: corruption; economic growth; investment; human capital; government expenditure; foreign aid; Institutional and Behavioral Economics; Labor and Human Capital; Public Economics;

    This paper has been announced in the following NEP Reports:

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    1. David Stasavage & Cécile Daubrée, 1998. "Determinants of Customs Fraud and Corruption: Evidence from Two African Countries," OECD Development Centre Working Papers 138, OECD Publishing.
    2. Lui, Francis T, 1985. "An Equilibrium Queuing Model of Bribery," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 760-81, August.
    3. Bigsten, Arne & Moene, Karl Ove, 1996. "Growth and Rent Dissipation: The Case of Kenya," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 5(2), pages 177-98, June.
    4. Acemoglu, D. & Verdier, T., 1997. "The Choice between Market Failures and Corruption," DELTA Working Papers 97-06, DELTA (Ecole normale supérieure).
    5. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    6. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
    7. 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.
    8. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1993. "Why Is Rent-Seeking So Costly to Growth?," American Economic Review, American Economic Association, vol. 83(2), pages 409-14, May.
    9. Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June.
    10. Stephen Knack, 2001. "Aid Dependence and the Quality of Governance: Cross-Country Empirical Tests," Southern Economic Journal, Southern Economic Association, vol. 68(2), pages 310-329, October.
    11. Paolo Mauro, 1996. "The Effects of Corruptionon Growth, Investment, and Government Expenditure," IMF Working Papers 96/98, International Monetary Fund.
    12. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
    13. Mo, Pak Hung, 2001. "Corruption and Economic Growth," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 66-79, March.
    14. Isaac Ehrlich & Francis T. Lui, 1999. "Bureaucratic Corruption and Endogenous Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S270-S293, December.
    15. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
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