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Corruption, Income Distribution, and Growth

  • Hongyi Li

    (Chinese University of Hong Kong)

  • Lixin Colin Xu

    (The World Bank)

  • Heng-fu Zou

    (The World Bank
    Peking University)

This paper uses an encompassing framework developed by Murphy et al. (1991, 1993) to study corruption and how it affects income distribution and growth. We find that (1) corruption affects income distribution in an inverted U-shaped way, (2) corruption alone also explains a large proportion of the Gini differential across developing and industrial countries, and (3) that even after correcting for measurement errors, corruption still retards economic growth. But the effect is far less pronounced than the one found in Mauro (1995). Moreover, corruption alone explains little of the continental growth differentials. In countries where the asset distribution is less equal, corruption is associated with a smaller increase in income inequality and a larger drop in growth rates.

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Paper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 472.

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Length: 42 pages
Date of creation: 2000
Date of revision:
Publication status: Published in Economics & Politics, Volume 12, Issue 2, pages 155┬ĘC182, July 2000
Handle: RePEc:cuf:wpaper:472
Contact details of provider: Web page: http://cema.cufe.edu.cn/
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  1. Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association, vol. 46(2), pages 237-43, June.
  2. Zhang, Tao & Zou, Heng-fu, 1998. "Fiscal decentralization, public spending, and economic growth in China," Journal of Public Economics, Elsevier, vol. 67(2), pages 221-240, February.
  3. Bird, Richard & Wallich, Christine, 1993. "Fiscal decentralization and intergovernmental relations in transition economics : toward a systematic framework of analysis," Policy Research Working Paper Series 1122, The World Bank.
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