{ "title": "Corruption, Public Investment, and Growth", "publication": "IMF Working Papers, October 1, 1997", "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/corruption-public-investment-and-growth-2353", "canonical": "https://www.imf.org/en/publications/wp/issues/2016/12/30/corruption-public-investment-and-growth-2353", "overlayPath": "/en/publications/wp/issues/2016/12/30/corruption-public-investment-and-growth-2353/index.md", "summary": "Corruption, particularly political or “grand” corruption, distorts the entire decision-making process connected with public investment projects. The degree of distortions is higher with weaker auditing institutions.", "sections": [ { "heading": "Summary findings", "content": "- Corruption, particularly political or “grand” corruption, distorts the entire decision-making process connected with public investment projects.\n- The degree of distortions is higher with weaker auditing institutions.\n- Evidence shows that higher corruption is associated with:\n - (i) higher public investment;\n - (ii) lower government revenues;\n - (iii) lower expenditures on operations and maintenance; and\n - (iv) lower quality of public infrastructure.\n- The evidence also shows that corruption increases public investment while reducing its productivity.\n- These are five channels through which corruption lowers growth.\n- Implication: Economists should be more restrained in their praise of high public sector investment, especially in countries with high corruption." }, { "heading": "Evidence and channels", "content": "- Corruption affects public investment at multiple stages of decision-making and implementation.\n- Weaker auditing institutions amplify distortions caused by corruption.\n- The net effect observed is higher levels of public investment but lower productivity and quality of the resulting infrastructure.\n- Channels identified that link corruption to lower growth include reduced government revenues, underinvestment in operations and maintenance, and lower infrastructure quality." }, { "heading": "Policy implications and recommendations", "content": "- Exercise caution in advocating high public sector investment without accounting for the level of corruption and strength of auditing institutions.\n- Strengthening auditing institutions could reduce the degree of distortion in public investment decisions.\n- Improving governance and reducing political (“grand”) corruption can help ensure public investment translates into productive infrastructure and growth." }, { "heading": "Publication and metadata", "content": "- Title: Corruption, Public Investment, and Growth\n- Authors: Vito Tanzi, Hamid R Davoodi\n- Date: October 1, 1997\n- Series: Working Paper No. 1997/139\n- Issue: 139\n- Volume: 1997\n- Pages: 23\n- DOI: https://doi.org/10.5089/9781451929515.001\n- Stock No: WPIEA1391997\n- ISBN: 9781451929515\n- ISSN: 1018-5941\n- Subjects: Capital spending, Corruption, Crime, Current spending, Expenditure, Infrastructure, National accounts, Public investment spending\n- Keywords: capital, Capital spending, Corruption, corruption index, corruption-investment relationship, Current spending, GDP, Global, government revenue-GDP ratio, growth, Infrastructure, infrastructure investment, investment, investment budget, productivity, public investment, Public investment spending, spending, WP\n- Related note: IMF eLibrary offers over 25,000 IMF publications in multiple formats.\n\nSource: \"Corruption, Public Investment, and Growth\", IMF Working Papers, Vito Tanzi and Hamid R Davoodi, October 1, 1997.\n\n---\n\n Content in this bundle\n\n- Corruption, Public Investment, and Growth - WP/97/139\n - Corruption, Public Investment, and Growth - WP/97/139 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Corruption, Public Investment, and Growth - WP/97/139 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/corruption-public-investment-and-growth-2353" } ], "bullets": [ "[Markdown version](/en/publications/wp/issues/2016/12/30/corruption-public-investment-and-growth-2353/index.md)", "[Structured JSON version](/en/publications/wp/issues/2016/12/30/corruption-public-investment-and-growth-2353/index.json)", "[Bundle manifest](/en/publications/wp/issues/2016/12/30/corruption-public-investment-and-growth-2353/bundle-manifest.json)", "Authors: Vito Tanzi, Hamid R Davoodi", "Published: October 1, 1997", "Series: IMF Working Papers", "DOI: https://doi.org/10.5089/9781451929515.001", "Corruption, particularly political or “grand” corruption, distorts the entire decision-making process connected with public investment projects.", "The degree of distortions is higher with weaker auditing institutions.", "Evidence shows that higher corruption is associated with:", "The evidence also shows that corruption increases public investment while reducing its productivity.", "These are five channels through which corruption lowers growth.", "Implication: Economists should be more restrained in their praise of high public sector investment, especially in countries with high corruption.", "Corruption affects public investment at multiple stages of decision-making and implementation.", "Weaker auditing institutions amplify distortions caused by corruption.", "The net effect observed is higher levels of public investment but lower productivity and quality of the resulting infrastructure.", "Channels identified that link corruption to lower growth include reduced government revenues, underinvestment in operations and maintenance, and lower infrastructure quality.", "Exercise caution in advocating high public sector investment without accounting for the level of corruption and strength of auditing institutions.", "Strengthening auditing institutions could reduce the degree of distortion in public investment decisions.", "Improving governance and reducing political (“grand”) corruption can help ensure public investment translates into productive infrastructure and growth.", "Title: Corruption, Public Investment, and Growth", "Authors: Vito Tanzi, Hamid R Davoodi", "Date: October 1, 1997", "Series: Working Paper No. 1997/139", "Issue: 139", "Volume: 1997", "Pages: 23", "DOI: https://doi.org/10.5089/9781451929515.001", "Stock No: WPIEA1391997", "ISBN: 9781451929515", "ISSN: 1018-5941", "Subjects: Capital spending, Corruption, Crime, Current spending, Expenditure, Infrastructure, National accounts, Public investment spending", "Keywords: capital, Capital spending, Corruption, corruption index, corruption-investment relationship, Current spending, GDP, Global, government revenue-GDP ratio, growth, Infrastructure, infrastructure investment, investment, investment budget, productivity, public investment, Public investment spending, spending, WP", "Related note: IMF eLibrary offers over 25,000 IMF publications in multiple formats.", "**Corruption, Public Investment, and Growth - 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