Economic growth, lawand corruption: evidence from India

Author name: 
Sambit Bhattacharyya
Raghbendra Jha

Is corruption influenced by economic growth? Are legal institutions such as the „Right to Information Act (RTI) 2005‟ inIndia effective in curbing corruption? Using a novel panel dataset covering 20 Indian states and the periods 2005 and 2008 we are able to estimate the causal effects of economic growth and law on corruption. Tackling for endogeneity, omitted fixed factors, andother nationwide changes which may be affecting corruptionwe findthat economic growth reduces overall corruption as well as corruption in banking, land administration, education, electricity, and hospitals. Growth however has little impact on corruption perception. In contrast the RTI Act reducesboth corruption experience and corruption perception.

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