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Does corruption grease or sand the wheels of growth?

  • Pierre-Guillaume Méon
  • Khalid Sekkat

This paper assesses the relationship between the impact of corruption on growth and investment and the quality of governance in a sample of 63 to 71 countries between 1970 and 1998. Like previous studies, we find a negative effect of corruption on both growth and investment. Unlike previous studies, we find that corruption has a negative impact on growth independently from its impact on investment. These impacts are, however, different depending on the quality of governance. They tend to worsen when indicators of the quality of governance deteriorate. This supports the “sand the wheels” view on corruption and contradicts the “grease the wheels” view, which postulates that corruption may help compensate bad governance. Copyright Springer Science + Business Media, Inc. 2005

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Paper provided by ULB -- Universite Libre de Bruxelles in its series ULB Institutional Repository with number 2013/7364.

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Date of creation: Jan 2005
Date of revision:
Publication status: Published in: Public Choice (2005) v.122 n° 1-2,p.69-97
Handle: RePEc:ulb:ulbeco:2013/7364
Contact details of provider: Postal: CP135, 50, avenue F.D. Roosevelt, 1050 Bruxelles
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