All in Favor of Corruption, Please Stand

It's hard to find many economists who do not view corruption as an impediment to growth in the developing world.  Yet, a more nuanced view may show that sometimes corruption is a positive factor.  Consider the case of importers who bribe customs agents in order to avoid onerously high tariffs or stringent quotas.  In that case, actions to nullify the effects of those restrictions may be welcome.  Pushan Dutt and Daniel Traça suggest when tariffs exceed 25 percent, corruption can be beneficial.  Of course, there are distributional consequences from this solution!

 

Figure 1. Control of corruption, 2007

Source: Kaufmann, Kraay, and Mastruzzi (2008).

 

 

Leave a Reply

Your email address will not be published.