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Is corruption an efficient grease?

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Author Info
Méon, Pierre-Guillaume () (BOFIT)
Weill, Laurent (BOFIT)

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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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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
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Handle: RePEc:hhs:bofitp:2008_020

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Related research
Keywords: governance; corruption; income; aggregate productivity; efficiency;

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Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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Full references

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. Aidt, T.S., 2009. "Corruption, Institutions and Economic Development," Cambridge Working Papers in Economics 0918, Faculty of Economics, University of Cambridge. [Downloadable!]
    Other versions:
  2. 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:
  3. 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:
  4. Dzhumashev, Ratbek, 2008. "Corruption and regulatory burden," MPRA Paper 2081, University Library of Munich, Germany. [Downloadable!]
  5. Pierre-Guillaume Méon & Khalid Sekkat, 2007. "Revisiting the Relationship between Govenance and Foreign Direct Investment," Working Papers DULBEA 07-13.RS, Université libre de Bruxelles, Department of Applied Economics (DULBEA). [Downloadable!]
    Other versions:
  6. Goel, Rajeev K. & Korhonen, Iikka, 2009. "Composition of Exports and Cross-Country Corruption," BOFIT Discussion Papers 5/2009, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  7. Andrew Hodge & Sriram Shankar & D.S. Prasada Rao & Alan Duhs, 2009. "Exploring the links between corruption and growth," Discussion Papers Series 392, School of Economics, University of Queensland, Australia. [Downloadable!]
  8. Méon, Pierre-Guillaume & Weill, Laurent, 2008. "Is corruption an efficient grease?," BOFIT Discussion Papers 20/2008, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
    Other versions:
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