 Corruption and growth: The role of governance, public spending, and economic developmentEconomic Modelling, 2014, vol. 37, issue C, 202-215 Abstract: This paper analyses how the quality of governance, the size of public spending, and economic development affect the relationship between bureaucratic corruption and economic growth. The analysis shows that the interaction between corruption and governance shapes the efficiency of public spending, which in turn, determines the growth effects of corruption. Specifically, corruption improves economic efficiency only when the actual government size is above the optimal level. It implies that a growth-maximising level of corruption is possible. This paper also finds that the incidence of corruption declines with economic development. This is because with economic development the wage rate rises and makes private rent seeking costs higher, thereby, discouraging corruption. The main policy implication is that targeting tax evaders instead of bureaucrats is more effective in terms of both reducing corruption and improving the growth potential of an economy. Keywords: Corruption; Development; Governance; Economic growth (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:37:y:2014:i:c:p:202-215 DOI: 10.1016/j.econmod.2013.11.007 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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