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Economic Perspectives, Vol. 32, 2008
Corruption and Innovation
In this article, the author illustrates how corruption can lower the rate of product innovation in an industry. This is important because, if many industries are subject to corrupt practices, the lower rate of innovation would result in a lower growth rate for the whole economy. Actually, the view that corruption is closely related to economic development is widely held in practice: Poor African countries, such as Kenya and Zaire, are commonly believed to lose a considerable fraction of their gross domestic product (GDP) to corruption activities. A Corruption Perception Index in the article shows a clear negative relation between corruption and economic development.
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