What is it about?
The paper explains why in low-income economies an increase in government spending results in lower economic growth. The paper demonstrates that such an outcome is caused by the negative effect of corruption that in its turn is fueled by the rent-seeking stemming from greater government spending.
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Why is it important?
The main message is that in economies that are prone to corruption, keeping government spending low is crucial for economic growth enhancement.
Perspectives
I hope that policymakers will find the main idea of the paper useful. That is, to achieve higher growth potential, low-income economies cannot mechanically rely on increasing public spending, as its effects depend on the incidence of corruption and the level of economic development in the economy.
Dr Ratbek Dzhumashev
Monash University
Read the Original
This page is a summary of: THE TWO-WAY RELATIONSHIP BETWEEN GOVERNMENT SPENDING AND CORRUPTION AND ITS EFFECTS ON ECONOMIC GROWTH, Contemporary Economic Policy, June 2013, Wiley,
DOI: 10.1111/coep.12025.
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