Growth and development under different corruption regimes

Yuan Wang

Manchester School, 2020, vol. 88, issue 2, 305-323

Abstract: This paper explicitly models four different corruption regimes according to the way in which corruption is practised. It distinguishes between organized and disorganized, collusive and non‐collusive corruption. The implications of these are compared and contrasted to provide ranking regarding their impacts on growth. Corruption is always bad, but the extent of the detrimental effect on growth is sensitive to the corruption regime observed. The least (or most) damaging regime is the one in which corruption is both organized and collusive (or disorganized and non‐collusive), as broadly characterizes the situation in China and its fast‐growing neighbours (or some African countries). An effective anti‐corruption policy should focus on fighting embezzlement and discretionary rent‐seeking first, which will dramatically reduce the adverse effect of corruption on growth.

Date: 2020
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