Corruption, growth, and increasing returns to production specialization

Juin-jen Chang, Huei-chung Lu and Hsueh-fang Tsai

International Journal of Economic Theory, 2015, vol. 11, issue 3, 329-345

Abstract: type="main" xml:lang="en">

This paper builds an endogenous growth model in which a government implements entry regulations and bureaucrats are corrupt, with both governing firms’ entry. We show that in the presence of increasing returns to production specialization, high corruption and high growth can coexist. This explains why some developing countries are stuck with high levels of corruption and low levels of growth, while others are not. Moreover, in the face of either stricter anti-corruption enforcement or deregulation by promoting market competition, corruption may exhibit an intensive margin response in the sense that the number of bribe-paying firms decreases, but each individual firm bribes more for a production license.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/ (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ijethy:v:11:y:2015:i:3:p:329-345

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1742-7355

Access Statistics for this article

International Journal of Economic Theory is currently edited by Kazuo Nishimura and Makoto Yano

More articles in International Journal of Economic Theory from The International Society for Economic Theory
Bibliographic data for series maintained by Wiley Content Delivery ().