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The Economic Costs of Corruption: A Survey and New Evidence

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Author Info
Axel Dreher (Thurgau Institute of Economics & University of Konstanz)
Thomas Herzfeld (Department of Agricultural Economics, University of Kiel)

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Abstract

This paper reviews the empirical literature on the economic costs of corruption. Corruption affects economic growth, the level of GDP per capita, investment activity, international trade and price stability negatively. Additionally, it biases the composition of government expenditures. The second part of the paper estimates the effect of corruption on economic growth and GDP per capita as well as on six possible transmission channels. The results of this analysis allows to calculate the total effect of corruption: An increase of corruption by about one index point reduces GDP growth by 0.13 percentage points and GDP per capita by 425 US$.

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Paper provided by EconWPA in its series Public Economics with number 0506001.

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Date of creation: 02 Jun 2005
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Handle: RePEc:wpa:wuwppe:0506001

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Keywords: Costs of Corruption; Survey; Empirical Evidence;

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Find related papers by JEL classification:
O1 - Economic Development, Technological Change, and Growth - - Economic Development
K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other
C39 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Other

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References listed on IDEAS
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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. 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:
  2. Giuseppe Vita, 2007. "A note on exogenous changes in incentives for and deterrence of corruption," European Journal of Law and Economics, Springer, vol. 24(1), pages 15-27, August. [Downloadable!] (restricted)
  3. Guiseppe Di Vita, . "Corruption, Exogenous Changes in Incentives and Deterrence," German Working Papers in Law and Economics 2006-1-1150, Berkeley Electronic Press. [Downloadable!]
  4. Olivier Armantier & Amadou Boly, 2008. "Can Corruption Be Studied in the Lab? Comparing a Field and a Lab Experiment," CIRANO Working Papers 2008s-26, CIRANO. [Downloadable!]
  5. Axel Dreher & Lars Siemers, 2005. "The Intriguing Nexus between Corruption and Capital Account Restrictions," KOF Working papers 05-113, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
    Other versions:
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