The Persistence of Corruption and Slow Economic Growth
IMF Working Papers, November 1, 2002
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- The Persistence of Corruption and Slow Economic Growth
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Bibliographic details
- Authors: Paolo Mauro
- Published: November 1, 2002
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451874952.001
Summary
- There is increasing recognition that corruption has substantial, adverse effects on economic growth.
- If the costs of corruption are so high, the paper asks why countries do not strive to improve institutions and root out corruption.
- 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 advanced 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.
Models and Mechanisms
- Two formal models are used to illustrate how strategic complementarities and multiple equilibria can generate persistence of corruption.
- Key mechanism: widespread corruption alters individual incentives so that collective action to reduce corruption fails even when collective welfare would increase.
- Keywords tied to the mechanisms: bribe rate, multiple equilibria, strategic complementarities, persistence, production function.
Findings and Themes
- Corruption has substantial, adverse effects on economic growth (stated as a central finding/theme).
- The persistence of corruption can help explain prolonged episodes of slow economic growth and recurrent government instability (revolutions and coups).
- The paper situates the analysis at the intersection of public sector behavior and macroeconomic outcomes.
Publication and Metadata
- Author: Paolo Mauro
- Date: November 1, 2002
- Pages: 23
- Volume: 2002
- Issue: 213
- Series: Working Paper No. 2002/213
- DOI: https://doi.org/10.5089/9781451874952.001
- Stock No: WPIEA2132002
- ISBN: 9781451874952
- ISSN: 1018-5941
- Subjects: Civil service, Corruption, Crime, Economic sectors, Expenditure, Labor, Public sector
IMF Working Paper — 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.