Corruption & the Wealth of Nations

Corruption is often cited as a fundamental obstacle to economic development, making anticorruption initiatives an important policy objective. However, there is little convincing empiricalevidence concerning the benefits of anti-corruption reform. We fill this gap by identifying a set ofcountries that experienced a sustained increase in corruption control and compare the outcomes ofthis group with a counterfactual set of similar countries that experienced no such change. We findsome evidence that corruption reforms significantly raise real GDP per-capita. We also find thatmany corruption reforms are temporary, emphasizing the need to focus on sustainability whenengaging in corruption reform. We document for the first time a strong asymmetry of results, ascountries that experience a large discrete increase in corruption do not suffer a significant decline inreal GDP per-capita