7 Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth

Abstract

The intensification of the public debate on governance, together with the increased emphasis on governance issues in policy deliberations, has stimulated considerable research aimed at examining the effects of institutional quality on economic performance. Many studies, for example, North (1990) and Shleifer and Vishny (1993), have argued that malfunctioning government institutions severely harm economic performance by reducing incentives and opportunities to invest and innovate. Among the different aspects of governance, corruption has received particular attention by both policymakers and researchers as the recent availability of corruption measures has helped to quantify its extent and allowed international comparisons. In a pioneering study, Mauro (1995) emphasizes that corruption may constitute a significant obstacle to investment. Nevertheless, different economic aspects of the corruption issue remain unexamined. In particular, the determinants of corruption and its effect on growth through channels other than investment have so far received scant attention.

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