The Costs of Denial

Shantayanan Devarajan
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Shantayanan Devarajan: Georgetown University

No 747, Working Papers from Center for Global Development

Abstract: Noting that the recent performance of developing countries is significantly worse than it was in the first decade and a half of this century, this paper suggests that the latter may have contributed to the former. Drawing on cases from the Middle East, Africa, and South Asia, I show how rapid growth and poverty reduction can lead policymakers and the international community to deny the existence of governance problems such as corruption and elite capture. When this denial increases distrust between citizens and the government, it often leads to political and economic turmoil that can result (and has resulted) in civil wars, instability, and a slowdown in economic growth. Moreover, growth-fueled denial works against transparency, which is an important tool for addressing governance problems. It also represents a lost opportunity to build domestic consensus for reform, which is easier during periods of economic growth. In sum, the costs of denial are huge.

Keywords: economic growth; corruption; political economy (search for similar items in EconPapers)
JEL-codes: D73 O40 P00 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2026-06-01
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