Does Corruption Sand or Grease the Economic Wheels?

Kouramoudou Keita, Hannu Laurila

Research output: Contribution to journalArticleScientificpeer-review


Common wisdom is that corruption hampers economic development by casting “sand in the wheels”, but some economists still claim that corruption may slip “grease in the wheels” if governance is badly malfunctioning. This paper investigates the dilemma in a non-linear growth model with 99 countries worldwide over 2006–2014. The empirical results show that the quality of governance is generally negatively correlated with GDP per capita growth but that the role of corruption in this context remains mixed. The main finding is that if governance is labeled by deficiencies in Government effectiveness, Regulatory quality or Rule of law, corruption tends to mitigate their negative growth effects. Thus, the results indicate notable support for the grease in the wheels hypothesis.
Original languageEnglish
Pages (from-to)127-151
JournalJournal of Development Economics and Finance - Open Access Journal
Issue number1
Publication statusPublished - 5 Jun 2021
Publication typeA1 Journal article-refereed


  • development; governance; growth; infrastructures; investments.

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