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Does corruption grease or sand the wheels of growth?

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  • Pierre-Guillaume Méon
  • Khalid Sekkat

Abstract

This paper assesses the relationship between the impact of corruption on growth and investment and the quality of governance in a sample of 63 to 71 countries between 1970 and 1998. Like previous studies, we find a negative effect of corruption on both growth and investment. Unlike previous studies, we find that corruption has a negative impact on growth independently from its impact on investment. These impacts are, however, different depending on the quality of governance. They tend to worsen when indicators of the quality of governance deteriorate. This supports the “sand the wheels” view on corruption and contradicts the “grease the wheels” view, which postulates that corruption may help compensate bad governance. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Pierre-Guillaume Méon & Khalid Sekkat, 2005. "Does corruption grease or sand the wheels of growth?," Public Choice, Springer, vol. 122(1), pages 69-97, January.
  • Handle: RePEc:kap:pubcho:v:122:y:2005:i:1:p:69-97
    DOI: 10.1007/s11127-005-3988-0
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