Corruption and the institutional environment for growth

Jac C. Heckelman, Benjamin Powell

Research output: Contribution to journalArticle

44 Scopus citations

Abstract

Several cross-country studies have found that corruption is detrimental to economic growth, but the findings are not universally robust. We utilize the economic freedom index to examine if corruption can facilitate growth by allowing entrepreneurs to avoid inefficient policies and regulations when economic freedom is limited. Using regression analysis, we find that corruption is growth enhancing when economic freedom is most limited but the beneficial impact of corruption decreases as economic freedom increases. Not all areas of economic freedom affect the corruption-growth relationship equally. In particular, we find the beneficial effect of corruption disappears most quickly when the size of government and the extent of regulation decrease.

Original languageEnglish
Pages (from-to)351-378
Number of pages28
JournalComparative Economic Studies
Volume52
Issue number3
DOIs
StatePublished - Sep 2010

Keywords

  • corruption
  • economic freedom
  • growth

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