IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2507.13099.html
   My bibliography  Save this paper

Governance, productivity and economic development

Author

Listed:
  • Cuong Le Van

    (CNRS, PSE, CES)

  • Ngoc-Sang Pham

    (EM Normandie)

  • Thi Kim Cuong Pham

    (EconomiX)

  • Binh Tran-Nam

    (RMIT)

Abstract

This paper explores the interplay between transfer policies, R\&D, corruption, and economic development using a general equilibrium model with heterogeneous agents and a government. The government collects taxes, redistributes fiscal revenues, and undertakes public investment (in R\&D, infrastructure, etc.). Corruption is modeled as a fraction of tax revenues that is siphoned off and removed from the economy. We first establish the existence of a political-economic equilibrium. Then, using an analytically tractable framework with two private agents, we examine the effects of corruption and evaluate the impact of various policies, including redistribution and innovation-led strategies.

Suggested Citation

  • Cuong Le Van & Ngoc-Sang Pham & Thi Kim Cuong Pham & Binh Tran-Nam, 2025. "Governance, productivity and economic development," Papers 2507.13099, arXiv.org.
    • Handle: RePEc:arx:papers:2507.13099
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2507.13099
    File Function: Latest version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Uberti, Luca J., 2022. "Corruption and growth: Historical evidence, 1790–2010," Journal of Comparative Economics, Elsevier, vol. 50(2), pages 321-349.
    2. Cuong Le Van & Ngoc-Sang Pham, 2016. "Intertemporal equilibrium with financial asset and physical capital," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 62(1), pages 155-199, June.
    3. Pham, Ngoc-Sang & Pham, Thi Kim Cuong, 2020. "Effects of foreign aid on the recipient country’s economic growth," Journal of Mathematical Economics, Elsevier, vol. 86(C), pages 52-68.
    4. Benjamin A. Olken & Rohini Pande, 2012. "Corruption in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 479-509, July.
    5. Tapan Mitra, 1998. "On Equilibrium Dynamics Under Externalities in a Model of Economic Development," The Japanese Economic Review, Japanese Economic Association, vol. 49(2), pages 85-107, June.
    6. Lisa Morhaim & Charles-Henri Dimaria & Cuong Le Van, 2002. "The discrete time version of the Romer model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(1), pages 133-158.
    7. Ngoc Sang Pham & Thi Kim Cuong Pham, 2020. "Effects of foreign aid on the recipient country's economic growth," Post-Print hal-03159190, HAL.
    8. Kanat Abdulla, 2021. "Corrosive effects of corruption on human capital and aggregate productivity," Kyklos, Wiley Blackwell, vol. 74(4), pages 445-462, November.
    9. GOURDEL, Pascal & NGOC, Liem Hoang & LE VAN, Cuong & MAZAMBA, Tédié, 2004. "Equilibrium and competitive equilibrium in a discrete-time Lucas model," LIDAM Reprints CORE 1742, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. repec:hal:pseose:hal-01302382 is not listed on IDEAS
    11. Méon, Pierre-Guillaume & Weill, Laurent, 2010. "Is Corruption an Efficient Grease?," World Development, Elsevier, vol. 38(3), pages 244-259, March.
    12. Jochen Hartwig & Jan‐Egbert Sturm, 2025. "Revisiting the impact of corruption on income inequality worldwide," Kyklos, Wiley Blackwell, vol. 78(1), pages 206-242, February.
    13. Wang, Zhaohua & Danish, & Zhang, Bin & Wang, Bo, 2018. "The moderating role of corruption between economic growth and CO2 emissions: Evidence from BRICS economies," Energy, Elsevier, vol. 148(C), pages 506-513.
    14. d'Albis, Hippolyte & Le Van, Cuong, 2006. "Existence of a competitive equilibrium in the Lucas (1988) model without physical capital," Journal of Mathematical Economics, Elsevier, vol. 42(1), pages 46-55, February.
    15. Réda Marakbi & Patrick Villieu, 2020. "Corruption, tax evasion, and seigniorage in a monetary endogenous growth model," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 2019-2050, December.
    16. Stefano Bosi & David Desmarchelier & Thai Ha‐Huy, 2022. "Wheels and cycles: Suboptimality and volatility of corrupted economies," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(4), pages 440-460, December.
    17. Mondjeli, Itchoko Motande Mwa Ndjokou & Ambassa, Martin, 2025. "Does corruption really matter for the structure of public expenditures?," Structural Change and Economic Dynamics, Elsevier, vol. 73(C), pages 181-195.
    18. Demir, Firat & Hu, Chenghao & Liu, Junyi & Shen, Hewei, 2022. "Local corruption, total factor productivity and firm heterogeneity: Empirical evidence from Chinese manufacturing firms," World Development, Elsevier, vol. 151(C).
    19. Pascal Gourdel & Liem Hoang Ngoc & Cuong Le Van & Tédié Mazamba, 2004. "Equilibrium and Competitive Equilibrium in a Discrete-Time Lucas Model," Post-Print halshs-00119011, HAL.
    20. Cieślik, Andrzej & Goczek, Łukasz, 2018. "Control of corruption, international investment, and economic growth – Evidence from panel data," World Development, Elsevier, vol. 103(C), pages 323-335.
    21. Bosi, Stefano & Le Van, Cuong & Phung, Giang, 2025. "Economic growth with brown or green capital," Journal of Mathematical Economics, Elsevier, vol. 117(C).
    22. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 681-712.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cuong Le Van & Ngoc-Sang Pham & Thi Kim Cuong Pham & Binh Tran-Nam, 2025. "Governance, productivity and economic development," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-05163866, HAL.
    2. Bosi, Stefano & Le Van, Cuong & Phung, Giang, 2025. "Economic growth with brown or green capital," Journal of Mathematical Economics, Elsevier, vol. 117(C).
    3. Marius Valentin Boldea, 2006. "On the equilibrium in a discrete-time Lucas Model with endogenous leisure," Cahiers de la Maison des Sciences Economiques b06054, Université Panthéon-Sorbonne (Paris 1).
    4. Marius Valentin Boldea, 2006. "On the equilibrium in a discrete-time Lucas Model," Post-Print halshs-00118829, HAL.
    5. Madhu Sehrawat & Sanjay Kumar Singh, 2021. "Do Corruption and Income Inequality Play Spoilsport in The Energy Efficiency-Growth Relationship in BRICS Countries?," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(4), pages 727-746, December.
    6. Chaoyi Chen & Mehmet Pinar & Thanasis Stengos, 2024. "Bribery, regulation and firm performance: evidence from a threshold model," Empirical Economics, Springer, vol. 66(1), pages 405-430, January.
    7. Barra, Cristian & Papaccio, Anna & Ruggiero, Nazzareno, 2024. "The interaction between corruption, bank cost efficiency and economic development in Italy," Economic Systems, Elsevier, vol. 48(3).
    8. Armand, Alex & Coutts, Alexander & Vicente, Pedro C. & Vilela, Inês, 2023. "Measuring corruption in the field using behavioral games," Journal of Public Economics, Elsevier, vol. 218(C).
    9. Krifa-Schneider, Hadjila & Matei, Iuliana & Sattar, Abdul, 2022. "FDI, corruption and financial development around the world: A panel non-linear approach," Economic Modelling, Elsevier, vol. 110(C).
    10. repec:diw:diwwpp:dp1917 is not listed on IDEAS
    11. Kouramoudou Kéïta & Hannu Laurila, 2021. "Corruption and Tax Burden: What Is the Joint Effect on Total Factor Productivity?," Economies, MDPI, vol. 9(1), pages 1-16, March.
    12. Anh‐Tuan Doan & Bich‐Thanh Truong & Chi‐Cuong Nguyen & Phan‐Tam‐Nhu Nguyen & Hai‐Yen Truong & Anh‐Tuan Le, 2023. "Corruption and corporate leverage in an emerging economy: The role of economic freedom," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(2), pages 599-629, June.
    13. Gauthier, Bernard & Goyette, Jonathan & Kouamé, Wilfried A.K., 2021. "Why do firms pay bribes? Evidence on the demand and supply sides of corruption in developing countries," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 463-479.
    14. Kostas Rontos & Maria-Eleni Syrmali & Luca Salvati & Ioannis Vavouras, 2024. "Competitiveness, corruption, and income inequalities: approaching the ‘Janus’ face of development with simultaneous equation modelling," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(1), pages 343-364, February.
    15. Mthanti, Thanti & Ojah, Kalu, 2017. "Institutions, Human Capital and Entrepreneurial Orientation (EO): Implications for Growth Strategy," MPRA Paper 89551, University Library of Munich, Germany.
    16. António Afonso & Eduardo Sá Fortes Leitão Rodrigues, 2022. "Corruption and economic growth: does the size of the government matter?," Economic Change and Restructuring, Springer, vol. 55(2), pages 543-576, May.
    17. Xu, Xiangbing & Dong, Nanyan & Wu, Chengzhang & Luo, Sicheng, 2025. "The employment effects of anticorruption: Evidence from China," Emerging Markets Review, Elsevier, vol. 66(C).
    18. Fhima, Fredj & Nouira, Ridha & Sekkat, Khalid, 2023. "How does corruption affect sustainable development? A threshold non-linear analysis," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 505-523.
    19. Claire Giordano, Paloma Lopez-Garcia, 2018. "Is corruption efficiency-enhancing? A case study of the Central and Eastern European region," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 15(1), pages 119-164, June.
    20. Gründler, Klaus & Potrafke, Niklas, 2019. "Corruption and economic growth: New empirical evidence," European Journal of Political Economy, Elsevier, vol. 60(C).
    21. Jean-Michel Grandmont, 2013. "Tribute to Cuong Le Van," International Journal of Economic Theory, The International Society for Economic Theory, vol. 9(1), pages 5-10, March.

    More about this item

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2507.13099. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.