This paper uses panel data from African countries and a dynamic panel estimator to investigate the effects of corruption
on economic growth and income distribution. I find that corruption decreases economic growth directly and indirectly through
decreased investment in physical capital. A unit increase in corruption reduces the growth rates of GDP and per capita income
by between 0.75 and 0.9 percentage points and between 0.39 and 0.41 percentage points per year respectively. The results also
indicate that increased corruption is positively correlated with income inequality. The combined effects of decreased income
growth and increased inequality suggests that corruption hurts the poor more than the rich in African countries.
Key words: Corruption, economic growth, income distribution, dynamic panel estimator, Africa
JEL Classification: O11, O55, K42
Received: March 19, 2001 / Accepted: December 14, 2001
RID="*"
ID="*" An earlier version of this paper was presented at the first AmFiTan International Conference on Development Ethics
in February 2000, Dar er Salaam, Tanzania. I thank two anonymous referees of this Journal for helpful suggestions. I am, however, solely responsible for any remaining errors.