The Persistence of Corruption and Slow Economic Growth

Author/Editor:

Paolo Mauro

Publication Date:

November 1, 2002

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

There is increasing recognition that corruption has substantial, adverse effects on economic growth. But if the costs of corruption are so high, why don’t countries strive to improve their institutions and root out corruption? Why do many countries appear to be stuck in a vicious circle of widespread corruption and low economic growth, often accompanied by ever-changing governments through revolutions and coups? A possible explanation is that when corruption is widespread, individuals do not have incentives to fight it even if everybody would be better off without it. Two models involving strategic complementarities and multiple equilibria attempt to illustrate this formally.

Series:

Working Paper No. 02/213

Subject:

English

Publication Date:

November 1, 2002

ISBN/ISSN:

9781451874952/1018-5941

Stock No:

WPIEA2132002

Format:

Paper

Pages:

23

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