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Corruption in Developing Countries

Author

Listed:
  • Benjamin A. Olken

    (Department of Economics, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142)

  • Rohini Pande

    (Harvard Kennedy School of Government, Harvard University, Cambridge, Massachusetts 02138)

Abstract

Recent years have seen a remarkable expansion in economists' ability to measure corruption. This in turn has led to a new generation of well-identified, microeconomic studies. We review the evidence on corruption in developing countries in light of these recent advances, focusing on three questions: how much corruption is there, what are the efficiency consequences of corruption, and what determines the level of corruption? We find robust evidence that corruption responds to standard economic incentive theory but also that the effects of anticorruption policies often attenuate as officials find alternate strategies to pursue rents.

Suggested Citation

  • Benjamin A. Olken & Rohini Pande, 2012. "Corruption in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 479-509, July.
    • Handle: RePEc:anr:reveco:v:4:y:2012:p:479-509
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-080511-110917
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    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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