Governance regimes, corruption and growth: theory and evidence

By Toke S. Aidt, J. Dutta, Vania Sena. 2008

622 citations recorded by the source corpus.

We study the role of political accountability as a determinant of corruption and economic growth. Our model identifies two governance regimes defined by the quality of political institutions and shows that the relationship between corruption and growth is regime specific. We use a threshold model to estimate the impact of corruption on growth where corruption is treated as an endogenous variable. We find two governance regimes, conditional on the quality of political institutions. In the regime with high quality political institutions, corruption has a substantial negative impact on growth. In the regime with low quality institutions, corruption has no impact on growth.

Subfields: Economics and Econometrics, Information Systems, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/0657ee82aec83fed9e33472dfe125b8852eddc80

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Citations in the corpus

CORRUPTION'S DIRECT EFFECTS ON PER‐CAPITA INCOME GROWTH: A META‐ANALYSIS (2014, critical): “Hence, the stronger adverse effect on per-capita GDP growth in LICs does not support the findings of Aidt et al. (2008) and Méon and Weill (2010), who report that corruption has larger effects in countries with good quality institutions and smaller or no effects in countries with weak institutions.”
The Impact of Institutional Quality on Economic Growth: Panel Evidence (2014, background): “Various studies have shown that under weak democracy, institutions may not work effectively [Aidt, Dutta, and Sena (2008); Drury, Krieckhaus, and Lusztig (2006); Iqbal and Daly (2014); Méndez and Sepúlveda (2006)].”
Corruption and Sustainable Development (2011, background): “The other indicator of the quality of political institutions is a measure of their experience with democracy (democracy), suggested by 32 See, e.g., Aidt et al. (2008) or Bhattacharyya and Hodler (2010).”
Rent seeking and the economics of corruption (2016, background): “Subsequent research has shown that the growth effect interacts with the underlying quality of institutions (Aidt et al. 2008; Méndez and Sepúlveda 2006; Méon and Weill 2010) and that corruption has a detrimental impact on sustainable development (Aidt 2011b).”
Exploring the links between corruption and growth (2011, positive): “Our results, therefore, appear consistent with the broad theme of Aidt et al. (2008): namely, the negative effect of corruption on growth is dampened in economies with low governance levels.”
Political Versus Economic Institutions in the Growth Process (2014, methodology): “Using a different approach, Aidt, Dutta, and Sena (2008) examine the impact of corruption on growth across different political regimes, dividing the data into two groups according to the level of political institutions and obtaining a threshold level of institutions.”
Political connections and corporate investments: Evidence from the recent anti-corruption campaign in China (2017, result): “However, existing studies put forward two views, finding that corruption can either ‘sand’ or ‘grease’ the wheel of the economic growth (Shleifer and Vishny, 1993; Aidt et al., 2008).”
Corruption and growth: The role of governance, public spending, and economic development (2014, background): “…particular, if government size is related to the degree of government intervention and the inefficiencies induced by it, then, an increase in government size creates more room for rent-seeking and corruption (for example, see Alesina and Angeletos, 2005; Goel and Nelson, 1998; Rose-Ackerman, 1999).”
Institutional infrastructure and economic growth in member countries of the Organization of Islamic Cooperation (OIC) (2015, background): “…institutions (Bhattacharyya, 2009; Rodrik, 2005), and other institutional risks (e.g., Nawaz, 2015)—only a few look at the relative importance of political and economic institutions (Acemoglu and Johnson, 2005; Aidt et al., 2008; Flachaire et al., 2014; Siddiqui and Ahmed, 2013).”
Corruption and firm growth: Evidence from China☆ (2012, background): “Aidt et al. (2008) show that quality of institutions substantially a¤ects the impact of corruption on economic growth: corruption is detrimental to growth where there are high-quality political institutions, but otherwise has no impact on growth. Similar results can also be seen in Méon and Weill (2”
Corruption, Institutions, and Economic Development (2009, methodology): “The third test, proposed by Aidt et al. (2008), addresses this last point.”
Corruption and the Institutional Environment for Growth (2010, methodology): “Previous studies (Aidt et al., 2008; Mendez and Sepulveda, 2006; Méon and Sekkat, 2005) have examined, with mixed results, how political institutions impact the relationship between corruption and growth.”