This volume presents 18 IMF research studies on the causes and consequences of corruption, as well as how it can most effectively be combated to improve governance, increase economic growth, and reduce poverty. The authors examine how civil service wages affect corruption, the impact of natural resource availability on corruption, the impact of corruption on a country’s income distribution and incidence of poverty, and the effect of corruption on government expenditures on health and education.
International Monetary Fund. External Relations Dept.
The rationale for IMF lending to Russia has been widely questioned, as have the record of earlier programs and the use made of previous IMF loans. In the following article, John Odling-Smee, Director of the IMF’s European II Department, explains that the resumed lending was fully justified to support Russia’s most recent economic policies.
This paper argues that natural resource abundance creates opportunities for rent-seeking behavior and is an important factor in determining a country’s level of corruption. In a simple growth model, we illustrate the interrelationships between natural resources, corruption, and economic growth, and discuss potential anti-corruption policies. We show that the extent of corruption depends on natural resource abundance, government policies, and the concentration of bureaucratic power. Furthermore, the growth effects of natural resource discoveries and anticorruption policies crucially depend on the economy’s state of development. We empirically corroborate the model’s implications in a cross-country framework with both corruption and growth endogenized.
Carmen M. Reinhart, Rodrigo Valdés, and Julio Velarde
GUILLERMO ORTIZ: So let me begin with you, Carmen. In your very distinguished academic career, you have focused on several subjects, but you have been really a student, an analyzer of Latin American economics and politics, and you are an expert on financial crises.
Let me welcome you all to this Per Jacobsson panel. This is the last of the IMF-sponsored events in this very fruitful week. We just had a board meeting of the Foundation, and the Vice Chairman of the Foundation and the First Deputy Managing Director of the IMF, David Lipton, gave us a reflection. I had asked him a question: How do you feel leaving the meetings as opposed to when you had just come into the meetings? And he said, well, the IMF put out all these documents prior to the meeting. We were told that day that we were a little bit pessimistic, that we were a little bit somber. But then, he said, last night they went to a panel sponsored by Citi, and Willem Buiter, who is, as you know, the chief economist for Citi, said that the IMF had been extremely optimistic. So he leaves it somewhere in between, and that’s a good place to be.