When is Corruption a Substitute for Economic Freedom?

Law and Development Review, Forthcoming

35 Pages Posted: 13 May 2008 Last revised: 4 Apr 2010

See all articles by Art Carden

Art Carden

Brock School of Business, Samford University; Independent Institute

Lisa L. Verdon

College of Wooster

Date Written: March 29, 2010

Abstract

Corruption supposedly reduces economic development by creating an uncertain contracting environment and by preventing the state from efficiently providing public goods and correcting externalities. However, corruption can be efficiency-enhancing in countries with relatively little economic freedom. Corruption in the military appears to reduce economic growth, while corruption in the educational environment appears to increase economic growth. On net, evidence suggests that corruption is growth-increasing when economic freedom is low.

Keywords: Corruption, Economic Freedom, Economic Growth

JEL Classification: D73, O10, O43

Suggested Citation

Carden, Art and Verdon, Lisa, When is Corruption a Substitute for Economic Freedom? (March 29, 2010). Law and Development Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1132751

Art Carden (Contact Author)

Brock School of Business, Samford University ( email )

800 Lakeshore Drive
Birmingham, AL 35229
United States

HOME PAGE: http://www.artcarden.com

Independent Institute ( email )

100 Swan Way
Oakland, CA 94621-1428
United States

Lisa Verdon

College of Wooster ( email )

Wooster, OH 44691
United States
(330)263-2216 (Phone)

HOME PAGE: http://web.me.com/lverdon/Lisa_L_Verdon/Home.html

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