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Is corruption an efficient grease?

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  • Méon, Pierre-Guillaume

    ()
    (BOFIT)

  • Weill, Laurent

    (BOFIT)

Abstract

This paper tests whether corruption may act as an efficient grease for the wheels of an oth-erwise deficient institutional framework. We analyze the interaction between aggregate efficiency, corruption, and other dimensions of governance for a panel of 54 developed and developing countries. Using three measures of corruption and five measures of other aspects of governance, we observe that corruption is consistently detrimental in countries where institutions are effective, but that it may be positively associated with efficiency in countries where institutions are ineffective. We thus find evidence of the grease the wheels hypothesis.

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Bibliographic Info

Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 20/2008.

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Length: 43 pages
Date of creation: 21 Nov 2008
Date of revision:
Handle: RePEc:hhs:bofitp:2008_020

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Postal: Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland
Phone: + 358 10 831 2268
Fax: + 358 10 831 2294
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Web page: http://www.suomenpankki.fi/bofit_en/
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Keywords: governance; corruption; income; aggregate productivity; efficiency;

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