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When Is Corruption a Substitute for Economic Freedom?

Author

Listed:
  • Carden Art

    (Rhodes College)

  • Verdon Lisa

    (College of Wooster)

Abstract

Corruption supposedly reduces economic progress by creating an uncertain contracting environment and by preventing the state from efficiently providing public goods and correcting externalities. However, corruption can be efficiency-enhancing in countries with relatively little economic freedom. Corruption in the military appears to reduce economic growth, while corruption in the educational environment can increase economic growth. Evidence suggests that some types of corruption can increase growth when economic freedom is low.

Suggested Citation

  • Carden Art & Verdon Lisa, 2010. "When Is Corruption a Substitute for Economic Freedom?," The Law and Development Review, De Gruyter, vol. 3(1), pages 40-63, May.
  • Handle: RePEc:bpj:lawdev:v:3:y:2010:i:1:n:2
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    References listed on IDEAS

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    1. Horst Feldmann, 2007. "Economic Freedom and Unemployment around the World," Southern Economic Journal, Southern Economic Association, vol. 74(1), pages 158-176, July.
    2. Gerring, John & Thacker, Strom C., 2008. "Do Neoliberal Economic Policies Kill or Save Lives?," Business and Politics, Cambridge University Press, vol. 10(03), pages 1-31, December.
    3. Isaac Ehrlich & Francis T. Lui, 1999. "Bureaucratic Corruption and Endogenous Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 270-293, December.
    4. Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 3-39, January.
    5. Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June.
    6. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    7. Aron, Janine, 2000. "Growth and Institutions: A Review of the Evidence," World Bank Research Observer, World Bank Group, vol. 15(1), pages 99-135, February.
    8. Mendez, Fabio & Sepulveda, Facundo, 2006. "Corruption, growth and political regimes: Cross country evidence," European Journal of Political Economy, Elsevier, vol. 22(1), pages 82-98, March.
    9. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
    10. James D . Gwartney & Randall G . Holcombe & Robert A . Lawson, 2006. "Institutions and the Impact of Investment on Growth," Kyklos, Wiley Blackwell, vol. 59(2), pages 255-273, May.
    11. Vito Tanzi & Hamid R Davoodi, 2000. "Corruption, Growth, and Public Finances," IMF Working Papers 00/182, International Monetary Fund.
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    Cited by:

    1. repec:spr:soinre:v:138:y:2018:i:3:d:10.1007_s11205-017-1696-z is not listed on IDEAS
    2. Soumyajit Mazumder, 2016. "Can I stay a BIT longer? The effect of bilateral investment treaties on political survival," The Review of International Organizations, Springer, vol. 11(4), pages 477-521, December.
    3. Pieroni, L. & d'Agostino, G., 2013. "Corruption and the effects of economic freedom," European Journal of Political Economy, Elsevier, vol. 29(C), pages 54-72.
    4. Niklas Elert & Magnus Henrekson, 2016. "Evasive entrepreneurship," Small Business Economics, Springer, vol. 47(1), pages 95-113, June.

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