What is the relationship between corruption in a country (i.e., bribe- taking by government officials) and economic growth? Is corruption always bad? When discussing the topic of whether or not corruption in a country has a definitively negative or positive relationship with economic growth really depends on who you ask. Some economists have shown that corruption stifles a country’s economic growth. One study of the connection between corruption and economic growth in 70 countries found that corruption had a significant negative impact on a country’s growth rate. (Hill, 2013) Empirical evidence suggests that corruption lowers investment and retards economic growth to a significant extent. (Paolo, 1997) Some economists state that corruption of a country causes lack of investments in a country and therefore by proxy slow economic growth. Empirical evidence suggests that corruption lowers investment and retards economic growth to a significant extent. Regression analysis indicates that the amount of corruption is negatively linked to the level of investment and economic growth, that is to say, the more corruption, the less investment and the less economic growth. (Paolo, 1997) Especially when unregulated by the corrupt country’s governing officials. Unproductive bureaucrats demand side payments for granting enterprise permissions and siphon off the profits from a business activity. (Hill, 2013) Lack of outside investments into a country deemed corrupt will stop new business from emerging thereby stopping any new job potential. This again would stagnate economic growth. Corruption in a country could also lead to unfair competition in which other businesses may not get a fair shot to grow. This would also lead to the minimization of economic growth. The level of corruption within a country should also be noted as a direct cause and effect relationship of economic growth. The more corruption equals less economic growth and investment from outside countries, therefore, bringing down that country’s ability to create new jobs and grow GDP. Conversely, when a country has less corruption, or possibly more regulated corruption by its government the affect could be a positive influencer of growth. Some economists believe that by paying facilitating payments they will bring substantial benefits to the local populace by way of income and jobs. (Hill, 2013) Sometimes the facilitating payments can secure contracts and improve efficiency and helps offset costly regulation. (Johnson, 2013) Some forms of corruption can help minimize barriers of entry so that progress and growth can be made. Therefore perhaps corruption is not always a bad thing. Source References: Hill, C. (2013). International Business Competing in the Global Marketplace. (pp. 141-143). New York, NY: McGraw-Hill Irwin.Hill, Charles W.L., (2013). International Business: Competing in the Global Marketplace. New York, NY: McGraw-Hill/Irwin. Paolo, M. (1997, February). Why worry about corruption?. Retrieved from http://www.imf.org/EXTERNAL/PUBS/FT/ISSUES6/ Johnson, N. (2013, July). Corruption, regulation, and growth: An empirical. Retrieved from http://noeldjohnson.net/noeldjohnson.net/Home_files/Corruption&Regulation 7-24-13 Noel Edits.pdf 2