IMF, Corruption and Growth

I decided to talk about this topic in conjunction with the recent IMF meeting in Singapore. There has been a lot of talk about corruption and how it has affected the growth of countries.

Funds used to help the developing countries did not have a significant effect on economic growth due to corruption. This was one of the points that was brought up during the meeting.

Furthermore, in my last post, I have received some comments saying that countries with abundant natural resource would require good governance for it to be properly allocated. I supposed that it is the same scenario with the injection of IMF funds into developing countries.

Well, although corruption is bad for growth. Countries in the South-east Asian region actually have experienced robust economic growth from the 1970 till 2000. Though, corruption level there are quite high.

Here is the Corruption Perceptions Index for SEA.

Source : Transparency International

So we may wonder, to what point does corruption play a part in distorting growth ? I have heard people saying that if there wasn't corruption, the region would not be as progressive today. But is that really true ? What I think is that growth in the region was due to capital accumulation from the 1960s that has contributed to the robust growth. Capital accumulation works in a way that pre-1960 the region was without much capital, thus the accumulation of capital would enable increasing returns. What do you think ?

By the way, please check out this site : Transparency International . I think they are doing a pretty good job in fighting corruption. Keep it up !