Aidt, T. S.

Corruption and Sustainable Development

CWPE1061

Abstract: This paper studies the relationship between corruption and sustainable development in a sample of 110 countries between 1996 and 2007. Sustainability is measured by growth in genuine wealth per capita. The empirical analysis consistently finds that cross-national measures of perceived and experienced corruption reduce growth in genuine wealth per capita. In contrast to the evidence on the relationship between corruption and growth in GDP per capita, the negative correlation between a wide range of different corruption indices and growth in genuine wealth per capita is very robust and is of economic as well as of statistical significance. We relate the finding to the literature on the resource curse and demonstrate that rampant corruption can put an economy on an unsustainable path along which its capital base is being eroded.

Keywords: Corruption, sustainable development, resource curse, cross-country analysis

JEL Codes: D72 D78

Author links: Toke Aidt

PDF: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1061.pdf