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Corruption, Institutions and Economic Development

  • Aidt, T.S.

Many scholarly articles on corruption give the impression that the world is populated by two types of people: the "sanders" and the "greasers". The "sanders" believe that corruption is an obstacle to development, while the "greasers" believe that corruption can (in some cases) foster development. This paper takes a critical look at these positions. It concludes that the evidence supporting the "greasing the wheels hypothesis" is very weak and shows that there is no correlation between a new measure of managers.actual experience with corruption and GDP growth. Instead, the paper uncovers a strong negative correlation between growth in genuine wealth per capita - a direct measure of sustainable development - and corruption. While corruption may have little average effect on the growth rate of GDP per capita, it is a likely source of unsustainable development.

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Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0918.

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Date of creation: 14 Apr 2009
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Handle: RePEc:cam:camdae:0918
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