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Are a country's corruption and development related?: a longitudinal cross-lagged structural equation model analysis.
1. INTRODUCTION
To assist developing countries, it has been the official policy of many aid agencies and development banks to alleviate poverty through promoting economic development and reducing corruption (International Monetary Fund, 2010; United Nations, 2009a; World Bank, 2009). The agencies and banks continue to use Gross Domestic Product per capita (GDP per capita) as a main indicator of economic development and have identified corruption as a key impediment to improving a country's economic growth (International Monetary Fund, 2000; United Nations, 2009b; World Bank, 2009). To encourage countries to reduce corruption they undertook two key strategies: First, they prioritized aid to countries demonstrating 'good' governance, and second, they made economic development loan provisions which require recipients to limit corruption (Kaufmann and Kraay, 2002; Kurtz and Schrank, 2007). Clearly, many international agencies see a cause-effect link between corruption and economic development. Researchers have been long searching for a better understanding of these linkages. Their study results can be placed in two broad categories: theory and empiricism. The general conclusions, from a theoretical perspective, are that corruption could retard economic growth through, for example, generating sociopolitical instability (Mo, 2001), encouraging bureaucratic processes specifically to support corruption (Jain, 2001) and reducing openness to trade (Pellegrini and Gerlagh, 2004). T...See the full content of this document
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