Corruption, Public Investment, and Growth
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Summary:
Corruption, particularly political or “grand” corruption, distorts the entire decision-making process connected with public investment projects. The degree of distortions is higher with weaker auditing institutions. The evidence presented shows that higher corruption is associated with (i) higher public investment; (ii) lower government revenues; (iii) lower expenditures on operations and maintenance; and (iv) lower quality of public infrastructure. The evidence also shows that corruption increases public investment while reducing its productivity. These are five channels through which corruption lowers growth. An implication is that economists should be more restrained in their praise of high public sector investment, especially in countries with high corruption.
Series:
Working Paper No. 1997/139
Subject:
Capital spending Corruption Crime Current spending Expenditure Infrastructure National accounts Public investment spending
English
Publication Date:
October 1, 1997
ISBN/ISSN:
9781451929515/1018-5941
Stock No:
WPIEA1391997
Pages:
23
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