Corruption and Growth: Evidence from the Italian regions

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Published: Dec 31, 2012

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Nadia Fiorino
University of L’Aquila
Italy
Emma Galli
'La Sapienza' University of Rome
Italy
Ilaria Petrarca
University of Verona
Italy
Vol. 1 No. 2 (2012), Articles, pages 126-144
DOI: https://doi.org/10.17979/ejge.2012.1.2.4281
Submitted: Sep 24, 2018 Published: Dec 31, 2012
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Abstract

This paper investigates the impact of corruption on economic growth in the Italian Regions. We estimate a dynamic growth model for the period 1980-2004 addressing both the potential bias of the measures of corruption and the endogeneity between corruption and economic development. We find strong evidence of a negative correlation between corruption and growth. Moreover, since government intervention has been traditionally used to reduce income differentials between the Northern and the Southern regions, we also analyze the interaction between corruption and government expenditure. Our results indicate that corruption undermines the positive impact that public expenditures have on economic growth.

Keywords:

corruption, associative crimes, economic growth, dynamic estimation

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