Corruption & the Wealth of Nations
33 Pages Posted: 18 Oct 2021
Date Written: October 2021
Abstract
Corruption is often cited as a fundamental obstacle to economic development, making anticorruption initiatives an important policy objective. However, there is little convincing empirical
evidence concerning the benefits of anti-corruption reform. We fill this gap by identifying a set of
countries that experienced a sustained increase in corruption control and compare the outcomes of
this group with a counterfactual set of similar countries that experienced no such change. We find
some evidence that corruption reforms significantly raise real GDP per-capita. We also find that
many corruption reforms are temporary, emphasizing the need to focus on sustainability when
engaging in corruption reform. We document for the first time a strong asymmetry of results, as
countries that experience a large discrete increase in corruption do not suffer a significant decline in
real GDP per-capita.
Keywords: Corruption, Anticorruption, Reform, Economic Performance
JEL Classification: D73, P41, O4, O47
Suggested Citation: Suggested Citation