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Effect of corruption on economic growth

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  • Legaspe Francisco

Abstract

Regardless of the substantial effort made by researchers, the effect that corruption has on economic growth is still under debate. Several studies identified a negative effect, but others support the idea that corruption is not in all cases harmful and that can even boost economic growth under certain conditions. This thesis is the first piece of literature using firm-level data on bribes to examine the effect that country-level corruption has on economic growth. To do so, I replicate the methodology used by Rajan & Zingales (1993). Specifically, I ask whether industrial sectors that are more sensitive to bribes develop disproportionally slower in countries with higher levels of corruption. I find this to be true in a large sample of countries over the period 2006-2021. This result supports the idea that corruption is indeed harmful to economic growth.

Suggested Citation

  • Legaspe Francisco, 2023. "Effect of corruption on economic growth," Asociación Argentina de Economía Política: Working Papers 4663, Asociación Argentina de Economía Política.
    • Handle: RePEc:aep:anales:4663
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    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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