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Governance Regimes, Corruption and Growth: Theory and Evidence

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  • Toke Aidt
  • Jayasri Dutta
  • Vania Sena

Abstract

We study the role of governance regimes in the determination of corruption and economic growth. Our model identifies two governance regimes and shows that the relationship between corruption and growth is regime specific. We use a threshold model to estimate the impact of corruption on growth and allow corruption to be endogenous. We identify two governance regimes, conditional on the quality of political institutions. In the regime with high quality political institutions, corruption has a negative impact on growth. In the regime with low quality institutions, corruption has little impact on growth.

Suggested Citation

  • Toke Aidt & Jayasri Dutta & Vania Sena, 2006. "Governance Regimes, Corruption and Growth: Theory and Evidence," Discussion Papers 15_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
  • Handle: RePEc:prt:dpaper:15_2006
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    More about this item

    Keywords

    Growth; corruption; threshold models; governance.;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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