This paper has benefited much from the comments of an anonymous referee.
Article first published online: 11 MAR 2014
© 2014 John Wiley & Sons Ltd
The World Economy
Volume 37, Issue 10, pages 1424–1440, October 2014
How to Cite
Badinger, H. and Nindl, E. (2014), Globalisation and Corruption, Revisited. World Economy, 37: 1424–1440. doi: 10.1111/twec.12156
- Issue published online: 8 OCT 2014
- Article first published online: 11 MAR 2014
This paper presents new empirical evidence on the determinants of corruption, focussing on the role of globalisation and inequality. The estimates for a panel of 102 countries over the period 1995–2005 point to three main results: (i) Detection technologies, reflected in a high level of development, human capital and political rights reduce corruption, whereas natural resource rents increase corruption; (ii) Globalisation (in terms of both trade and financial openness) has a negative effect on corruption, which is more pronounced in developing countries; (iii) Inequality increases corruption, and once the role of inequality is accounted for, the impact of globalisation on corruption is halved. In line with recent theory, this suggests that globalisation – besides reducing corruption through enhanced competition – affects corruption also by reducing inequality.