Corruption is bad for growth (even in the United States)
- 813 Downloads
We estimate the impact of corruption on growth of output per worker in U.S. states. We improve on existing studies of the cost of corruption by using a better specified empirical model, focusing on a study population that is less likely to be affected by parameter heterogeneity, and controlling for endogeneity using political variables to instrument for corruption. We find that corruption plays a significant and causal role in lowering growth and investment across the states.
KeywordsCorruption Investment Economic growth
Unable to display preview. Download preview PDF.
- Alt, J., & Lassen, D. (2008). Political and judicial checks on corruption: Evidence from American state governments. Economics and Politics, 20(1), 33–61. Google Scholar
- Beemiller, R. M., & Downey, G. K. (1998). Gross state product by industry, 1977–1996. Survey of Current Business, 78(June), 15–37. Google Scholar
- Book of the states (1970). Lexington: The Council of State Governments. Google Scholar
- Brock, W. A., & Durlauf, S. N. (2000). Growth economics and reality. NBER Working Paper W8041. Google Scholar
- De Soto, H. (1989). The other path. New York: Harper and Row. Google Scholar
- Huntington, S. P. (1968). Political order in changing societies. New Haven: Yale University Press. Google Scholar
- Kousser, J. M. (1999). Colorblind injustice: minority voting rights and the undoing of the second reconstruction. Chapel Hill: University of North Carolina Press. Google Scholar
- Leff, N. H. (1964). Economic development through bureaucratic corruption. American Behavioral Scientist, 82(2), 337–341. Google Scholar
- Lott, J. R., Jr. (1991). Does additional campaign spending really hurt incumbents? The theoretical importance of past investments in political brand name. Public Choice, 72(1), 87–92. Google Scholar
- Munnell, A. (1990). Why has productivity growth declined? Productivity and public investment. New England Economic Review, (January), 3–22. Google Scholar
- Murphy, K., Shleifer, A., & Vishny, R. (1993). Why is rent-seeking so costly to growth? American Economic Review, 83(2), 409–414. Google Scholar
- Myrdal, G. (1968). Asian drama. New York: Random House. Google Scholar
- New York Times Editors 2009. What’s Up With New Jersey? Resource Document. http://www.nytimes.com/2009/07/25/nyregion/25jersey.html?_r=1&hp=&pagewanted=print, New York Times, Accessed 6 August, 2009.
- North, D. (1990). Institutions, institutional change, and economic performance. Cambridge: Cambridge University Press. Google Scholar
- Olson, M. (2000). Power and prosperity: outgrowing communist and capitalist dictatorships. New York: Basic Books. Google Scholar
- Public Integrity Section (2001). Criminal Division, U.S. Department of Justice 2001. Report to Congress on the Activities & Operations of the Public Integrity Section for 2001. http://www.usdoj.gov/criminal/pin/AnnualReport2001.pdf.
- Renshaw, V., Trott, E. A., & Friedenberg, H. L. (1988). Gross state product by industry, 1963–1986. Survey of Current Business, 68(March), 30–46. Google Scholar
- Rose-Ackerman, S. (1978). Corruption: a study in political economy. New York: Academic Press. Google Scholar
- Solow, R. (2000). Perspectives on growth theory (2nd edn.). Oxford: Oxford University Press. Google Scholar
- Stock, J. H., & Yogo, M. (2002). Testing for weak instruments in linear IV regression. NBER working paper T0284. Google Scholar
- Tarr, G. A. (2000). Understanding state constitutions. Princeton: Princeton University Press. Google Scholar
- Tullock, G. (1990). The costs of special privilege. In J. E. Alt & K. Shepsle (Eds.) Perspectives on political economy (pp. 195–211). Cambridge: Cambridge University Press. Google Scholar
- Weingast, B. (1995). The economic role of political institutions: market-preserving federalism and economic development. Journal of Law, Economics, and Organization, 11(1), 1–31. Google Scholar