Journal Article

Corruption, institutions, and economic development

Toke S. Aidt

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 25, issue 2, pages 271-291
Published in print January 2009 | ISSN: 0266-903X
Published online January 2009 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/grp012
Corruption, institutions, and economic development

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Many scholarly articles on corruption give the impression that the world is populated by two types of people: the ‘sanders’ and the ‘greasers’. The ‘sanders’ believe that corruption is an obstacle to development, while the ‘greasers’ believe that corruption can (in some cases) foster development. This paper takes a critical look at these positions. It concludes that the evidence supporting the ‘greasing the wheels hypothesis’ is very weak and shows that there is no correlation between a new measure of managers’ actual experience with corruption and GDP growth. Instead, the paper uncovers a strong negative correlation between growth in genuine wealth per capita—a direct measure of sustainable development—and corruption. While corruption may have little average effect on the growth rate of GDP per capita, it is a likely source of unsustainable development.

Keywords: corruption; growth; sustainable development; D78; D82

Journal Article.  9934 words. 

Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

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