Abstract

In recent years, increasing attention has been devoted to understanding the reasons for, and economic consequences of, corruption. The existing literature can be divided into two broad strands. The first focuses on the determinants of corruption. Various studies have shown that the main factors affecting the scope and breadth of corruption are the quality of the civil service (Rauch and Evans, 2000); the level of public sector wages (van Rijckeghem and Weder, 1997); rule of law, particularly anticorruption legislation and the availability of natural resources (Leite and Weidmann, 1999); the economy’s degree of competition and trade openness; and the country’s industrial policy (Bhagwati, 1982; Krueger, 1993).1,2

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