Title

CORRUPTION: A CROSS-SECTION ANALYSIS

Presenter Information

Jacob Allington

Presentation Type

Presentation

Abstract

Indonesia, a country once characterized by rampant poverty and stagnant economic growth, is now home to the largest economy in Southeast Asia. Much of Indonesia’s economic success was fueled by the dramatic increase in economic growth that began in the 1970s. Surprisingly, this growth was accompanied by systemic corruption. While such an occurrence may be an anomaly, a number of economists hypothesized that corruption may actually lead to increased economic growth long before there was any real-world growth pattern to substantiate it. This view of corruption, which is known as the “corruption as grease theory,” has been the subject of much debate and while most economists believe it has been disproved, it may hold true given certain conditions. Much of the previous literature attempts to evaluate the corruption as grease theory using either a case-study approach or an applied theoretical approach. My analysis is different since I conduct a cross-section analysis of corruption and growth using a large swath of countries in a variety of developmental stages in an attempt to uncover the conditions under which corruption may prove beneficial. In my model, GDP growth serves as the dependent variable and corruption serves as the key independent variable. The control variables change depending on the version of the model but pertain to one of the following categories—capital, education, geography, health, natural resources, institutions, technology, or infrastructure. Whether corruption is wholly detrimental to economic growth or partially beneficial, it continues to be a major part of global economic activity.

Category

Social Sciences

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Apr 15th, 4:20 PM Apr 15th, 4:40 PM

CORRUPTION: A CROSS-SECTION ANALYSIS

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Indonesia, a country once characterized by rampant poverty and stagnant economic growth, is now home to the largest economy in Southeast Asia. Much of Indonesia’s economic success was fueled by the dramatic increase in economic growth that began in the 1970s. Surprisingly, this growth was accompanied by systemic corruption. While such an occurrence may be an anomaly, a number of economists hypothesized that corruption may actually lead to increased economic growth long before there was any real-world growth pattern to substantiate it. This view of corruption, which is known as the “corruption as grease theory,” has been the subject of much debate and while most economists believe it has been disproved, it may hold true given certain conditions. Much of the previous literature attempts to evaluate the corruption as grease theory using either a case-study approach or an applied theoretical approach. My analysis is different since I conduct a cross-section analysis of corruption and growth using a large swath of countries in a variety of developmental stages in an attempt to uncover the conditions under which corruption may prove beneficial. In my model, GDP growth serves as the dependent variable and corruption serves as the key independent variable. The control variables change depending on the version of the model but pertain to one of the following categories—capital, education, geography, health, natural resources, institutions, technology, or infrastructure. Whether corruption is wholly detrimental to economic growth or partially beneficial, it continues to be a major part of global economic activity.