The Persistence of Corruption and Slow Economic Growth
November 1, 2002
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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.
Subject: Civil service, Corruption, Crime, Economic sectors, Expenditure, Labor, Public sector
Keywords: bribe rate, Civil service, corruption, economic growth, government collapse, government intervention, government's policy, incumbent government, multiple equilibria, persistence, production function, Public sector, strategic complementarities, WP
Pages:
23
Volume:
2002
DOI:
Issue:
213
Series:
Working Paper No. 2002/213
Stock No:
WPIEA2132002
ISBN:
9781451874952
ISSN:
1018-5941
