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Corruption clubs: endogenous thresholds in corruption and development

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  • M. Haque

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  • Richard Kneller

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Abstract

The relationship between corruption and economic development is characterised by three stylised facts: (i) a strong negative correlation between corruption and development (ii) countries can remain trapped in high corruption-low development or low corruption-high development equilibria (iii) amongst intermediate levels of development corruption levels are more variable, some countries have high corruption and others low corruption. This paper argues that existing models are consistent with the first two only and demonstrates how these models might be extended to capture all three. The paper searches for the location of corruption clubs within the data and provides some explanation of their cause.
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Suggested Citation

  • M. Haque & Richard Kneller, 2009. "Corruption clubs: endogenous thresholds in corruption and development," Economics of Governance, Springer, vol. 10(4), pages 345-373, November.
  • Handle: RePEc:spr:ecogov:v:10:y:2009:i:4:p:345-373
    DOI: 10.1007/s10101-009-0064-0
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Tamoya Christie, 2014. "The Effect Of Government Spending On Economic Growth: Testing The Non-Linear Hypothesis," Bulletin of Economic Research, Wiley Blackwell, vol. 66(2), pages 183-204, April.
    2. Guych NURYYEV & Charles HICKSON, 2015. "Corruption Centralization, Investments, and Growth: Analysis of 62 countries for 1995-2007," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 15(1), pages 17-30.
    3. Liu Qijun & Peng Yaping, 2015. "Determinants of Willingness to Bribe: Micro Evidence from the Educational Sector in China," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 235(2), pages 168-183, April.
    4. Dzhumashev, Ratbek, 2014. "Corruption and growth: The role of governance, public spending, and economic development," Economic Modelling, Elsevier, vol. 37(C), pages 202-215.
    5. Atsushi Kato & Takahiro Sato, 2014. "The effect of corruption on the manufacturing sector in India," Economics of Governance, Springer, vol. 15(2), pages 155-178, May.
    6. Michael, Bryane & Popov, Maja, 2012. "Do Customs Trade Facilitation Programmes Help Reduce Customs-Related Corruption?," EconStor Preprints 109021, ZBW - German National Library of Economics.
    7. Ratbek Dzhumashev, 2014. "The Two-Way Relationship Between Government Spending And Corruption And Its Effects On Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 32(2), pages 403-419, April.
    8. Andrzej Cieślik & Łukasz Goczek, 2015. "Corruption perception, income level and growth in post-communist countries: evidence from panel data," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 39, pages 87-102.

    More about this item

    Keywords

    Corruption; Public spending; Thresholds; Development; D73; H26; O11;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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