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The Persistence of Corruption and Slow Economic Growth

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  • Mr. Paolo Mauro

Abstract

There is increasing recognition that corruption has substantial, adverse effects on economic growth. But if the costs of corruption are so high, why don’t countries strive to improve their institutions and root out corruption? Why do many countries appear to be stuck in a vicious circle of widespread corruption and low economic growth, often accompanied by ever-changing governments through revolutions and coups? A possible explanation is that when corruption is widespread, individuals do not have incentives to fight it even if everybody would be better off without it. Two models involving strategic complementarities and multiple equilibria attempt to illustrate this formally.

Suggested Citation

  • Mr. Paolo Mauro, 2002. "The Persistence of Corruption and Slow Economic Growth," IMF Working Papers 2002/213, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2002/213
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    References listed on IDEAS

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    More about this item

    Keywords

    WP; economic growth; production function; multiple equilibria; strategic complementarities; persistence; corruption; incumbent government; government collapse; bribe rate; government intervention; government's policy; Public sector; Civil service;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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