Is corruption an efficient grease?

Pierre-Guillaume Méon and Laurent Weill ()

No 20/2008, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition

Abstract: This paper tests whether corruption may act as an efficient grease for the wheels of an oth-erwise deficient institutional framework. We analyze the interaction between aggregate efficiency, corruption, and other dimensions of governance for a panel of 54 developed and developing countries. Using three measures of corruption and five measures of other aspects of governance, we observe that corruption is consistently detrimental in countries where institutions are effective, but that it may be positively associated with efficiency in countries where institutions are ineffective. We thus find evidence of the grease the wheels hypothesis.

Keywords: governance; corruption; income; aggregate productivity; efficiency (search for similar items in EconPapers)
JEL-codes: C33 K40 O43 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-law and nep-reg
Date: 2008-11-21
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Related works:
Working Paper: Is Corruption an Efficient Grease ? (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:bofitp:2008_020

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