The Surprising Benefits of Corruption in the Economy

We all know that corruption is a bad thing. People in government or the public sector using their position to personally enrich themselves is a form of stealing, but in some situations this can actually help to grow an economy. But in what situations, and how long can corruption continue to grow an economy once it becomes more developed?

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[allgoodnamestaken]

"corruption at all levels...according to some economists - might even be an instrument for the common good."
I get the feeling that these economists should have their finances audited, not for any particular reason.

[saltblood]

man, if only people were open about their corruption so these poor economists could properly track them, everyone is working against these poor economists

[Septumsempra]

"Grease the Wheel" dilema. At first corruption allows businesses to move fast (jump the queue), but eventually the administration expects a bribe and thus you need to pay to be in the queue.
🇿🇦🇿🇼

[Illusion]

It's also worth pointing out the heavy correlation between corruption level and economic level... In the ICRG graph you showed, the countries on the least corrupt side were also majority Advanced economies which tend to have a lower growth rate than developing countries. That seems like a much more likely reason for the correlation between corruption and growth to me.

[souravjaiswal-jrbj]

One of the reason that wealthy countries have less corruption is officials are getting good pay and enjoy middle class standards. People will think twice to commit a crime when there is a risk to lose their comfortable, stable life.

[PakBallandSami]

“No matter how corrupt, greedy, and heartless our government, our corporations, our media, and our religious & charitable institutions may become, the music will still be wonderful.”
― kurt vonnegut,

[alfredragnar]

Hard no. You could talk about countries that have a strong economy DESPITE the corruption, but corruption is never a positive trait.

[дигл_лайв]

My immediate question to the proposal of corruption being good for growth would be: Why would corruption be good for growth and not the other way around? Why can't corruption be a side effect of growth instead of it's cause? Just because it happens at the same time doesn't mean it has any benefits to it.
I'm not sure I agree with the analogy of drownings and ice cream sales, because they are entirely unrelated to each other, and both relate to something else. I don't thing growth and corruption are entirely unrelated to each other, but I think it's growth that causes corruption instead of the other way around. When things are rapidly growing, it's very difficult to have strict rules and police them properly.

[SomeInfoSecDude]

Excellent. As always. Since your are asking I do enjoy such type of topic specific videos. Countries and their ranking on the economics explain ladder is great but diving into concepts is also very informative.

[chelseachampions]

It’s called corruption in China or Africa.
In the states or Europe it’s called lobbying/ campaign donations.
Language is a powerful tool

[LTVoyager]

I agree this is the old problem of attributing cause to correlation. The relationship between corruption and economic growth is simply a correlation with no causal relationship. The low growth countries have far larger issues than corruption and the high growth countries have advantages that overcome their corruption.

[dylreesYT]

I prefer the longer deep dive videos but videos like this are also important so just keep doing what you feel is natural. My only desired outcome for this channel is that you never stop posting.

[drsimonwyatt]

Correlation is not causation.

In developing countries where corruption is prevalent, economic growth is easy to achieve by implementing the technologies which were innovated in highly developed countries.

[Nom_AnorVSJedi]

Please define corruption. Is lobbying, ‘consulting fees’ and campaign contributions considered corruption?

[lvseka]

I have seen corruption used as an instrument to avoid unnecessary bureaucracy, particularly in lower income societies. This money typically ends up in the hands of lower paid jobs in such economies such as traffic police rather than in the hands of higher ups who would still pocket it.

The thing is, it works, people still want to avoid situations where they have to bribe others and in the event that they do, it results in higher wages for people who are relatively underpaid as well as a simplified system of service delivery or governance

[mequable]

A huge misunderstanding of causation vs. correlation.

[flexusSVR]

You manage to make economics fun, that's a great achievement in my book. This format is also great, an opportunity to tackle more aspects. Keep it up!

[leobfg]

Great length for this type of niche / short explanation. Perfect length for its subject matter without bloat

[alex_zetsu]

I got a laugh when you pointed out a bribe might be to take money that was stolen by the government anyways since in places with weak or compromised courts, that is very plausible. You can make the argument that in the short term a few bribes can grease the wheels and isn't always like paying a bribe to undermine financial controls at a major bank. The problem is that even "good" bribes will undermine trust in the law if it is publicly known unless trust is already gone.

[BofaDee]

Wow this channel exploded I remember when it was like 88k glad to see so many others liking/learning as much as I am here.