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    This blog highlights effective ideas in the fight against poverty and exclusion, and analyzes the impact of development projects in Latin America and the Caribbean.
  • Corruption and growth, revisited

    10
    Sep
    2014

    By

    corruption and growth

    Some years ago, there was a tsunami in the economics literature on the relationship between economic growth and corruption. When it became clear that correlation is not causation, and that perception is not necessarily reality, the wave dwindled, although a corruption-index industry did thrive, (for a while).

    A recent paper retakes this issue from a more rigorous stance.

    The first [contribution of this paper] is a simple but important empirical contribution: We provide causal evidence on the effect of economic growth on the amount of corruption in an economy. Despite much interest in the relationship between corruption and development, there exists very little credible evidence of a causal relationship.

    [….]

    Our second contribution is to lay out a mechanism through which economic growth reduces corruption.

    [….]

    Our results have several implications for understanding the determinants of corruption in developing countries. The finding that growth reduces corruption suggests that corruption might decline naturally as a country grows even without explicit anti-corruption efforts.

    [….]

    The results also highlight a complex interplay between growth and institutions. The fact that economic growth is most successful in reducing corruption when coupled with strong property rights implies a complementarity between policies to strengthen institutions and to promote growth, and a mechanism through which strengthening institutions can be self-reinforcing.

    So, here we go again.

    One Response to “Corruption and growth, revisited”

    • Sergio :

      Una conclusión muy fuerte teniendo en cuenta que solo se examina una forma de corrupción (sobornos). En tiempos recientes las formas de corrupción han mutado hacia formas más “soft” que no son observadas por las medidas tradicionales de corrupción. Por otro lado, dado que el crecimiento (del empleo en este caso) es más una variable cuyos efectos pueden venir rezagados, creo que sería mejor hacer este mismo ejercicio con datos que permitan tener una perspectiva de más largo plazo que la que pueden dar 4 años de muestra (o 48 meses). En todo caso, creo que el crecimiento sí ayuda a disminuir la corrupción pero no creo que sea algo que se deba dejar que simplemente ocurra como efecto de un mayor tasa de variación del ingreso; mecanismos fuertes anticorrupción deberían implementarse con los recursos adicionales producto del mayor crecimiento.

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