IMF Working Papers Volume 1997 Issue 139: Corruption, Public Investment, and Growth (1997)

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Corruption, Public Investment, and Growth

Author:

Mr. Vito Tanzi

Mr. Vito Tanzi
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Mr. Hamid R Davoodi

Mr. Hamid R Davoodi
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Series:: IMF Working Papers

Volume/Issue:: Volume 1997: Issue 139

Publication Date:: 01 Oct 1997

DOI:: https://doi.org/10.5089/9781451929515.001

ISBN:: 9781451929515

ISSN:: 1018-5941

Pages:: 23

Keywords:: WP; corruption index; investment; spending; GDP; capital; Corruption; public investment; growth; productivity; government revenue-GDP ratio; investment budget; corruption-investment relationship; infrastructure investment; Public investment spending; Capital spending; Infrastructure; Current spending; Global

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 1997: Issue 139

Language:: English

Publication Date:: 01 Oct 1997

DOI:: https://doi.org/10.5089/9781451929515.001

ISBN:: 9781451929515

ISSN:: 1018-5941

Pages:: 23

Keywords:: WP; corruption index; investment; spending; GDP; capital; Corruption; public investment; growth; productivity; government revenue-GDP ratio; investment budget; corruption-investment relationship; infrastructure investment; Public investment spending; Capital spending; Infrastructure; Current spending; Global

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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Corruption, particularly political or “grand” corruption, distorts the entire decision-making process connected with public investment projects. The degree of distortions is higher with weaker auditing institutions. The evidence presented shows that higher corruption is associated with (i) higher public investment; (ii) lower government revenues; (iii) lower expenditures on operations and maintenance; and (iv) lower quality of public infrastructure. The evidence also shows that corruption increases public investment while reducing its productivity. These are five channels through which corruption lowers growth. An implication is that economists should be more restrained in their praise of high public sector investment, especially in countries with high corruption.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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