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Is Corruption an Efficient Grease ?

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  • Pierre-Guillaume Méon
  • Laurent Weill

    ()
    (Laboratoire de Recherche en Gestion et Economie, Institut d'Etudes Politiques, Strasbourg)

Abstract

This paper tests whether corruption can be viewed as an efficient grease in the wheels of an otherwise deficient institutional framework. It does so by analyzing the interaction between aggregate efficiency, corruption, and other dimensions of governance for a panel of 54 countries both developed and developing. Using three measures of corruption and five measures of other aspects of governance, we repeatedly observe that corruption is always 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 Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg in its series Working Papers of LaRGE Research Center with number 2008-06.

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Date of creation: 2008
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Handle: RePEc:lar:wpaper:2008-06

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Keywords: Governance; corruption; income; aggregate productivity; efficiency.;

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