آیا توسعه مالی و کنترل فساد جایگزین ارتقای رشد می شوند؟

While financial development and corruption control have been studied extensively, their interaction has not. We develop a simple model in which low corruption and financial development both facilitate the undertaking of productive projects, but act as substitutes in doing so. The substitutability arises because corruption raises the need for liquidity and thus makes financial improvements more potent; conversely, financial underdevelopment makes corruption more onerous and thus raises the gains from reducing it. We test this substitutability by predicting growth, of countries and industries, using measures of financial development, lack of corruption, and a key interaction term. Both approaches point to positive effects from improving either factor, as well as to a substitutability between them. The growth gain associated with moving from the 25th to the 75th percentile in one factor is 0.63–1.68 percentage points higher if the second factor is at the 25th percentile rather than the 75th. The results show robustness to different measures of corruption and financial development and do not appear to be driven by outliers, omitted variables, or other theories of growth and convergence.

The importance, or unimportance, of complementarities has been a recurrent theme in economic development. This issue has been debated in various forms for decades, including by critics and proponents of “Big Push” theory. 1 Complementarities are important to understand from a positive and normative point of view. Their existence can lead to multiple equilibria and poverty traps, ideas which may be useful in understanding underdevelopment. They also tend to argue for policies characterized by multi-pronged, simultaneous investments rather than piecemeal efforts. For example, if health clinics and clean water are complementary in producing health, it may not be rational to invest in either unless both can be provided; conversely, if they are substitutes, investing in only one of them (at least initially) may well be justified. The goal of this paper is to focus this interaction question on two key ingredients of development: corruption control and financial development. Recent research (cited below) suggests both factors are important determinants of economic growth. The question we ask is, do they serve as complements or substitutes in promoting growth?

Both financial development and corruption control appear to have positive effects on growth, of industries or countries. Further, these two factors appear to operate as substitutes: when one is weaker, the marginal impact from improving the other is greater. This result holds true across a variety of specifications with substantial robustness. Our proposed rationale for the existence of such an interaction is that corruption raises the need for liquidity and thus makes financial development more potent. Conversely, low financial development adds to the weight of increased corruption and thus increases the gain from reducing it.