Corrupt Bureaucracy And Growth

In this paper, the authors analyze implications of corruption on growth. They extend existing growth models by incorporating ubiquitous corruption as a by-product of the public sector. Corruption affects both taxation and public good provision, and therefore causes income redistribution and inefficiencies in the public sector. These effects of corruption lead to lower growth through distortions of investment incentives and resources allocation. A large body of literature has shown that the services and infrastructure provided by the public sector play an important role in private production. Corruption distorts the purpose and functionality of the public sector.