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The role of government

Productive activity productive activity diminishing

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Unformatted text preview: ay in bribes as a % of sales” Corruption ! development? Does corruption promote growth? Corruption as the “grease” in the “wheels of commerce” In a second- best world, corruption may actually improve welfare even when some resources are spent on corrupt activites, black market, etc. Corruption as a “coase” bargain (where two aprties are in dispute over some externality, bribes = a payment to resolve the dispute But Where bribes exist and are expected, officials may deliberately CREATE barriers in order to collect MORE bribes Evidence does not support corruption- as- facilitation view Is corruption costly for growth? Which countries are corrupt? To understand, need to understand better how corruption influences productive activity Corruption is in the broader category of RENT- SEEKING BEHAVIOR...
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