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Do the effects of corruption upon growth differ between democracies and autocracies?

  • Andreas Assiotis
  • Kevin Sylwester

Many studies examining whether corruption lowers economic growth do not consider if the effects of corruption differ across countries. Whether corruption produces the same effects everywhere or whether its effects are conditional on some country characteristics is an important question. We investigate the association between corruption and growth, where the marginal impact of corruption is allowed to differ across democratic and non democratic regimes. Using cross-country, annual data from 1984 to 2007, we regress growth on corruption, democracy, and their interaction. We find that decreases in corruption raise growth but more so in authoritarian regimes. Possible reasons are in autocracies corruption causes more uncertainty, is of a more pernicious nature, or is less substitutable with other forms of rent seeking.

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File URL: http://papers.econ.ucy.ac.cy/RePEc/papers/06-13.pdf
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Paper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 06-2013.

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Length: 41 pages
Date of creation: Mar 2013
Date of revision:
Handle: RePEc:ucy:cypeua:06-2013
Contact details of provider: Web page: http://www.econ.ucy.ac.cy

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  1. Lambert-Mogiliansky, Ariane & Majumdar, Mukul & Radner, Roy, 2007. "Strategic analysis of petty corruption: Entrepreneurs and bureaucrats," Journal of Development Economics, Elsevier, vol. 83(2), pages 351-367, July.
  2. Nauro F. Campos & Francesco Giovannoni, 2006. "Lobbying, Corruption and Political Influence," CEDI Discussion Paper Series 06-14, Centre for Economic Development and Institutions(CEDI), Brunel University.
  3. Timothy Besley & Masayuki Kudamatsu, 2007. "Making Autocracy Work," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 48, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
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  6. Elias Papaioannou & Gregorios Siourounis, 2007. "Democratization And Growth," CEDI Discussion Paper Series 07-13, Centre for Economic Development and Institutions(CEDI), Brunel University.
  7. Harstad, Bård & Svensson, Jakob, 2006. "Bribes, Lobbying and Development," CEPR Discussion Papers 5759, C.E.P.R. Discussion Papers.
  8. Baldwin, Richard & Seghezza, Elena, 1996. "Testing for Trade-induced Investment-led Growth," CEPR Discussion Papers 1331, C.E.P.R. Discussion Papers.
  9. Mo, Pak Hung, 2001. "Corruption and Economic Growth," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 66-79, March.
  10. Murtin, Fabrice & Wacziarg, Romain, 2011. "The Democratic Transition," CEPR Discussion Papers 8599, C.E.P.R. Discussion Papers.
  11. Mendez, Fabio & Sepulveda, Facundo, 2006. "Corruption, growth and political regimes: Cross country evidence," European Journal of Political Economy, Elsevier, vol. 22(1), pages 82-98, March.
  12. Eduardo A. Cavallo & Alberto Cavallo, 2008. "Are Crises Good for Long-Term Growth? The Role of Political Institutions," Research Department Publications 4589, Inter-American Development Bank, Research Department.
  13. Orazio P. Attanasio & Lucio Picci & Antonello E. Scorcu, 2000. "Saving, Growth, and Investment: A Macroeconomic Analysis Using a Panel of Countries," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 182-211, May.
  14. Nobuo Akai & Yusaku Horiuchi & Masayo Sakata, 2005. "Short-run and Long-run Effects of Corruption on Economic Growth: Evidence from State-Level Cross-Section Data for the United States," International and Development Economics Working Papers idec05-5, International and Development Economics.
  15. Billger, Sherrilyn M. & Goel, Rajeev K., 2009. "Do existing corruption levels matter in controlling corruption?: Cross-country quantile regression estimates," Journal of Development Economics, Elsevier, vol. 90(2), pages 299-305, November.
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