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Corruption, taxation and economic growth : theory and evidence”

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  • Joseph G. Attila

    (UdA - Université d'Auvergne - Clermont-Ferrand I)

Abstract

In this paper, we analyze the interaction between corruption, taxation and economic growth. Our contributions are twofold. Theoretically, in an endogenous growth model, we introduce corruption in two different ways: corruption in the public expenditure and corruption in the public revenue. We show two opposing effects. Under certain conditions, corruption can affect growth rate positively but it can also exert a negative effect via fiscal revenue. Not only does it tend to make the tax rate, which maximizes the long run growth rate sub-optimal, but it can also create distortions that can lead to excessive tax rates harmful to growth. The empirical analyses are based on non parametric estimates as well as econometric investigations. Our results support the assumption of a non linear relationship between public resources and growth. Interactions between public resources and institutional variables evidence the following the results: (i) the more countries are corrupt the stronger the negative effects of taxation on the growth (ii) Once the negative effects of corruption are accounted
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Suggested Citation

  • Joseph G. Attila, 2009. "Corruption, taxation and economic growth : theory and evidence”," Post-Print hal-03429235, HAL.
    • Handle: RePEc:hal:journl:hal-03429235
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    Cited by:

    1. Tran, My Thi Ha, 2021. "Public Sector Management And Corruption In Asean Plus Six," OSF Preprints stxw4, Center for Open Science.
    2. Alm, James & Martinez-Vazquez, Jorge & McClellan, Chandler, 2016. "Corruption and firm tax evasion," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 146-163.
    3. Sarah Nizamani, 2020. "Higher Taxes Reduce Economic Growth: Overwhelming International Evidence," PIDE Knowledge Brief 2020:14, Pakistan Institute of Development Economics.
    4. Lien, Nguyen Phuong, 2015. "The impact of institutional quality on tax revenue in developing countries," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 5(10), pages 181-195, October.
    5. Julia G. Dobreva, 2019. "Impediments To Economic Development Of Contemporary Economies," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 13(1), pages 8-15.
    6. Manamba Epaphra, & John Massawe,, 2017. "Corruption, governance and tax revenues in Africa," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(4), pages 439-467, October.
    7. Yaru, Mohammed Aminu & Raji, Ajibola Simbiat, . "Corruption, Governance and Tax Revenue Performance in Sub-Saharan Africa," African Journal of Economic Review, African Journal of Economic Review, vol. 10(01).
    8. Meričková Beáta Mikušová & Bašteková Andrea & Stejskal Jan & Pekár Bernard, 2017. "Economic, Political, Social Factor of Corruption in the Slovak Republic," NISPAcee Journal of Public Administration and Policy, Sciendo, vol. 10(1), pages 99-120, June.
    9. Idrys Fransmel Okombi, 2021. "Taxation et croissance économique en Afrique: la qualité des institutions importe‐t‐elle?," African Development Review, African Development Bank, vol. 33(4), pages 592-606, December.
    10. S. Benson Simwanza & Dibyendu Maiti, 2025. "Does E-Government Reduce Corruption in Sub-Saharan Africa? A Theoretical and Empirical Analysis," Working papers 357, Centre for Development Economics, Delhi School of Economics.
    11. Dinh Thanh, Su & Hart, Neil & Canh, Nguyen Phuc, 2020. "Public spending, public governance and economic growth at the Vietnamese provincial level: A disaggregate analysis," Economic Systems, Elsevier, vol. 44(4).
    12. repec:osf:osfxxx:stxw4_v1 is not listed on IDEAS
    13. Beáta Mikušová Meričková & Marek Majerík & Michal Lendvorský, 2021. "The problem of corruption in the contracting out of public services - the case of Slovakia," Acta Universitatis Bohemiae Meridionalis, University of South Bohemia in Ceske Budejovice, Faculty of Economics, vol. 24(2), pages 75-90.
    14. Sule Akkoyunlu and Debora Ramella, 2020. "Corruption and Economic Development," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(2), pages 63-93, June.
    15. repec:rim:rimwps:17-29 is not listed on IDEAS
    16. Artem Ivanov, 2020. "Analysis of M & A agreements and their sectoral characteristics," Business Management, D. A. Tsenov Academy of Economics, Svishtov, Bulgaria, issue 2 Year 20, pages 38-53.

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