Economic implications of corruption in developing coutries like india
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Corruption is considered a strong constraint on growth and development. The academic literature, however, finds different effects of corruption on economic performance.
Some research considers corruption a ‘grease the wheels’ instrument.
In this view, corruption helps to overcome cumbersome bureaucratic constraints, inefficient provision of public services, and rigid laws (Huntington 1968, Lui 1985, Lein 1986), especially when countries’ institutions are weak and function poorly (Acemoglu and Verdier 2000, Meon and Weill 2010).
Other papers argue that corruption only reduces economic performance.
This is due to rent seeking, an increase of transaction costs and uncertainty, inefficient investments, and misallocation of production factors (Murphy et al. 1991, Shleifer and Vishny 1993, Rose-Ackerman 1997) that come with corruption.
A third stream finds ambiguous effects of corruption can be illustrated with respect to public finances in new EU member states.
Hanousek and Kocenda (2011) show that reductions in corruption either increase or decrease public investment, depending on the country and its institutions.
On the other hand, improvements in the corruption environment are mostly associated with better fiscal performance (decreases in the deficit as well as debt).
MARK BRAINLIEST..
Some research considers corruption a ‘grease the wheels’ instrument.
In this view, corruption helps to overcome cumbersome bureaucratic constraints, inefficient provision of public services, and rigid laws (Huntington 1968, Lui 1985, Lein 1986), especially when countries’ institutions are weak and function poorly (Acemoglu and Verdier 2000, Meon and Weill 2010).
Other papers argue that corruption only reduces economic performance.
This is due to rent seeking, an increase of transaction costs and uncertainty, inefficient investments, and misallocation of production factors (Murphy et al. 1991, Shleifer and Vishny 1993, Rose-Ackerman 1997) that come with corruption.
A third stream finds ambiguous effects of corruption can be illustrated with respect to public finances in new EU member states.
Hanousek and Kocenda (2011) show that reductions in corruption either increase or decrease public investment, depending on the country and its institutions.
On the other hand, improvements in the corruption environment are mostly associated with better fiscal performance (decreases in the deficit as well as debt).
MARK BRAINLIEST..
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