Corruption Clubs: Endogenous Thresholds in Corruption and Development

University of Nottingham Research Paper No. 2004/31

34 Pages Posted: 2 Aug 2005

See all articles by M. Emranul Haque

M. Emranul Haque

University of Nottingham

Richard Kneller

University of Nottingham

Abstract

The relationship between corruption and economic development is characterised by three stylised facts: (i) a strong negative correlation between corruption and development (ii) countries can remain trapped in high corruption-low development or low corruption-high development equilibria (iii) amongst intermediate levels of development corruption levels are more variable, some countries have high corruption and others low corruption. This paper argues that existing models are consistent with the first two only and demonstrates how these models might be extended to capture all three. The paper searches for the location of corruption clubs within the data and provides some explanation of their cause.

Keywords: Corruption, public spending, thresholds and development

JEL Classification: D73, H26, O11

Suggested Citation

Haque, Mohammad Emranul and Kneller, Richard, Corruption Clubs: Endogenous Thresholds in Corruption and Development. Available at SSRN: https://ssrn.com/abstract=764209 or http://dx.doi.org/10.2139/ssrn.764209

Mohammad Emranul Haque (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Richard Kneller

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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