Corruption, institutions, and economic development

Toke Aidt

Oxford Review of Economic Policy, 2009, vol. 25, issue 2, 271-291

Abstract: Many scholarly articles on corruption give the impression that the world is populated by two types of people: the 'sanders' and the 'greasers'. The 'sanders' believe that corruption is an obstacle to development, while the 'greasers' believe that corruption can (in some cases) foster development. This paper takes a critical look at these positions. It concludes that the evidence supporting the 'greasing the wheels hypothesis' is very weak and shows that there is no correlation between a new measure of managers' actual experience with corruption and GDP growth. Instead, the paper uncovers a strong negative correlation between growth in genuine wealth per capita --a direct measure of sustainable development--and corruption. While corruption may have little average effect on the growth rate of GDP per capita , it is a likely source of unsustainable development. Copyright 2009, Oxford University Press.

Date: 2009
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Working Paper: Corruption, Institutions and Economic Development (2009)
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