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The transition of corruption: From poverty to honesty

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  • Gundlach, Erich
  • Paldam, Martin

Abstract

Measures of corruption and income are highly correlated across countries. We use prehistoric measures of biogeography as instruments for modern income levels. We find that our instrumented incomes explain the cross-country pattern of corruption just as well as do actual incomes. This result demonstrates that the long-run causality is entirely from income to corruption. Hence, there is a Corruption Transition: As countries get rich, corruption vanishes.

Suggested Citation

  • Gundlach, Erich & Paldam, Martin, 2008. "The transition of corruption: From poverty to honesty," Kiel Working Papers 1411, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkwp:1411
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    References listed on IDEAS

    as
    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    2. Paldam, Martin, 2001. "Corruption and Religion Adding to the Economic Model," Kyklos, Wiley Blackwell, vol. 54(2-3), pages 383-413.
    3. Galor, Oded, 2005. "From Stagnation to Growth: Unified Growth Theory," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 4, pages 171-293 Elsevier.
    4. Erich Gundlach & Martin Paldam, 2008. "The Democratic Transition. A study of the causality between income and the Gastil democracy index," Economics Working Papers 2008-15, Department of Economics and Business Economics, Aarhus University.
    5. Gundlach, Erich & Paldam, Martin, 2009. "A farewell to critical junctures: Sorting out long-run causality of income and democracy," European Journal of Political Economy, Elsevier, vol. 25(3), pages 340-354, September.
    6. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
    7. Martin Paldam & Erich Gundlach, 2008. "Two Views on Institutions and Development: The Grand Transition vs the Primacy of Institutions," Kyklos, Wiley Blackwell, vol. 61(1), pages 65-100, February.
    8. Paldam, Martin & Gundlach, Erich, 2008. "Democratic transition, The: a study of the causality between income and the Gastil democracy index," Kiel Working Papers 1459, Kiel Institute for the World Economy (IfW).
    9. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
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    11. Olsson, Ola & Hibbs, Douglas Jr., 2005. "Biogeography and long-run economic development," European Economic Review, Elsevier, vol. 49(4), pages 909-938, May.
    12. Lambsdorff,Johann Graf, 2007. "The Institutional Economics of Corruption and Reform," Cambridge Books, Cambridge University Press, number 9780521872751, April.
    13. Gregory Clark, 2007. "Introduction to A Farewell to Alms: A Brief Economic History of the World," Introductory Chapters,in: A Farewell to Alms: A Brief Economic History of the World Princeton University Press.
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    More about this item

    Keywords

    Corruption; Biogeography; Long-run development;

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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