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Do the Effects of Corruption upon Growth Differ Between Democracies and Autocracies?

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  • Andreas Assiotis
  • Kevin Sylwester

Abstract

Many studies examining whether corruption lowers economic growth do not consider if the effects of corruption differ across countries. Whether corruption produces the same effects everywhere or whether its effects are conditional on some country characteristics are important questions. We investigate the association between corruption and growth, where the marginal impact of corruption is allowed to differ across democratic and nondemocratic regimes. Using cross-country, annual data from 1984 to 2007, we regress growth on corruption, democracy and their interaction. We find that decreases in corruption raise growth but more so in authoritarian regimes. Possible reasons are that in autocracies corruption causes more uncertainty, is of a more pernicious nature, or is less substitutable with other forms of rent seeking.

Suggested Citation

  • Andreas Assiotis & Kevin Sylwester, 2014. "Do the Effects of Corruption upon Growth Differ Between Democracies and Autocracies?," Review of Development Economics, Wiley Blackwell, vol. 18(3), pages 581-594, August.
    • Handle: RePEc:bla:rdevec:v:18:y:2014:i:3:p:581-594
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    5. Shrabani Saha & Kunal Sen, 2019. "The corruption-growth relationship: Do political institutions matter?," WIDER Working Paper Series wp-2019-65, World Institute for Development Economic Research (UNU-WIDER).

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