Traditionally, typical measures of corruption have been broad, composite indices which are often meant to measure overall corruption level in a country. In this thesis I study how different types of corruption can have different effects on development, measured by GDP growth, GDP per capita growth and GDP per capita. Thereby, I wanted to see if some types of corruption could be concluded as more damaging than others. I have discussed and empirically tested the consequences of corruption in public procurement, at political levels, and bureaucratic corruption in terms of facilitation payments.
The literature review points to that corruption can lead to higher transaction costs, uncertainty in the economy, and inefficient economic outcomes. The level of corruption and the quality of institutions are closely linked, and the quality of institutions is important to development in several aspects. In general, the effects of corruption which are especially damaging to development are the misallocation of resources and lower quality of the goods and services.
From the empirical investigation, all types of corruption included had a negative effect on GDP per capita growth. The perception-based estimates of bureaucratic corruption tend to have the strongest negative effect on different measures of GDP, while procurement corruption tends to have the weakest effect of the three. However, given that the measures of bureaucratic and political corruption are indices, while the measure of procurement corruption only corresponds to one single question, there is reason to suspect that the two former measures of corruption captures a broader dimension of corruption than the latter.
An interesting result is that procurement corruption seems to be less correlated with the measure of the quality of institutions than the two other measures of corruption. This finding suggests that the existence of procurement corruption is less affected by the quality of institutions, and therefore, that this type of corruption also is likely to be found in well-developed countries.