The Effects of Corruption on Growth and Public Expenditure

Abstract

The causes & effects of political corruption are studied; specific attention is dedicated to examining how corrupt behavior influences the composition of government expenditure. Several causes (eg, government subsidies, natural resource endowments, & sociological factors) & consequences (eg, a reduction in people's willingness to invest & losses in tax revenues) of political corruption are identified. Indices of corruption developed by two private firms illustrate the consequences of corruption for investment & for government expenditure. Analysis reveals that political corruption significantly affects investment & expenditure on public education & health. Despite the study's findings on the consequences of corruption, additional research is needed to understand the causality of corrupt behavior. 2 Tables, 23 References. J. W. Parker