Governance Regimes, Corruption And Growth: Theory And Evidence

The authors study the role of governance regimes in the determination of corruption and economic growth. The model identifies two governance regimes and shows that the relationship between corruption and growth is regime specific. They use a threshold model to estimate the impact of corruption on growth and allow corruption to be endogenous. They identify two governance regimes, conditional on the quality of political institutions. In the regime with high quality political institutions, corruption has a negative impact on growth. In the regime with low quality institutions, corruption has little impact on growth.