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The Economic Costs of Corruption: A Survey and New Evidence

Axel Dreher and Thomas Herzfeld ()

Public Economics from University Library of Munich, Germany

Abstract: This paper reviews the empirical literature on the economic costs of corruption. Corruption affects economic growth, the level of GDP per capita, investment activity, international trade and price stability negatively. Additionally, it biases the composition of government expenditures. The second part of the paper estimates the effect of corruption on economic growth and GDP per capita as well as on six possible transmission channels. The results of this analysis allows to calculate the total effect of corruption: An increase of corruption by about one index point reduces GDP growth by 0.13 percentage points and GDP per capita by 425 US$.

Keywords: Costs of Corruption; Survey; Empirical Evidence (search for similar items in EconPapers)
JEL-codes: O1 K49 C39 (search for similar items in EconPapers)
Date: 2005-06-02
New Economics Papers: this item is included in nep-afr and nep-law
Note: Type of Document - pdf
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