Corruption and Development

This chapter uses the common definition of corruption as the "misuse of public power for private or political gain", recognizing that "misuse" must be defined in terms of some standard. It overviews of the empirical evidence. The chapter begins with cross-country studies that explain the consequences of corruption and poor governance for economic growth and well being. It considers firm level surveys that explore the consequences of corruption for firm behavior. The chapter summarizes surveys that provide a window onto individual attitudes toward and experiences with corruption and dysfunctional government. It examines the causal link around and review studies that seek to determine the causes of poor government and corruption. The chapter introduces distinctions between administrative corruption and "state capture". Measures of corruption and poor governance are correlated with per capita income and with the United Nations Human Development Index. In contrast, policies which try to isolate corrupt countries and individuals from the international community.