The Persistence of Corruption and Slow Economic Growth

24 Pages Posted: 14 Feb 2006

See all articles by Paolo Mauro

Paolo Mauro

International Monetary Fund (IMF)

Date Written: November 2002

Abstract

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.

Keywords: multiple equilibria, strategic complementarities, persistence, corruption

JEL Classification: K42, O17

Suggested Citation

Mauro, Paolo, The Persistence of Corruption and Slow Economic Growth (November 2002). IMF Working Paper, Vol. , pp. 1-24, 2002. Available at SSRN: https://ssrn.com/abstract=880888

Paolo Mauro (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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