Removing Impediments to Sustainable Economic Development: The Case of Corruption

This paper examines causes and consequences of corruption within the process of economic development. Drawing on experiences and insights accumulated during the post-war period and reflected in a growing body of academic research, the paper analyzes institutional mechanisms that sustain corruption and the impact of corruption on development. It argues that many forms of corruption stem from the distributional attributes of the state in its role as the economy's central agent of resource allocation. It also addresses the question of what can be done about corruption and discusses the role of economic policies in developing incentives and institutions to reduce its incidence.