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Globalization, Inequality, and Corruption

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  • Harald Badinger

    () (Department of Economics, Vienna University of Economics and Business)

  • Elisabeth Nindl

    () (Department of Economics, Vienna University of Economics and Business)

Abstract

This paper presents new empirical evidence on the determinants of corruption, focussing on the role of globalization and inequality. The estimates for a panel of 102 countries over the period 1995-2005 point to three main results: i) Detection technologies, reflected in a high level of development, human capital, and political rights reduce corruption, whereas natural resource rents increase corruption. ii) Globalization (in terms of both trade and financial openness) has a negative effect on corruption, which is more pronounced in developing countries. iii) Inequality increases corruption, and once the role of inequality is accounted for, the impact of globalization on corruption is halved. In line with recent theory, this suggests that globalization – besides reducing corruption through enhanced competition – affects corruption also by reducing inequality.

Suggested Citation

  • Harald Badinger & Elisabeth Nindl, 2012. "Globalization, Inequality, and Corruption," Department of Economics Working Papers wuwp139, Vienna University of Economics and Business, Department of Economics.
  • Handle: RePEc:wiw:wiwwuw:wuwp139
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    More about this item

    Keywords

    Globalization; inequality; corruption;

    JEL classification:

    • F1 - International Economics - - Trade
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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