Enhanced IMF Policy on governance and corruption

Link: http://www.imf.org/en/Publications/Policy-Papers/Issues/2018/04/20/pp03….

The Framework is designed to promote more systematic, effective, candid, and evenhanded engagement with member countries regarding governance vulnerabilities, including corruption, that are judged to be macroeconomically critical.

IMF Staff estimates from panel regressions (Annex 4) indicate that a deterioration in the control of corruption index from the 50th percentile to the 25th percentile of the distribution is associated with a contemporaneous fall in GDP per capita growth in the range of 0.8–1.4 percentage points. There is also evidence of a significant relationship between corruption and medium-term growth (and long-run GDP levels). Estimates also suggest that worsening corruption (moving from the 50th to the 25th percentile) is associated with declines in investment, FDI, and tax to GDP ratios of 1.6, 1.7 and 0.3 percentage points, respectively. All these results are robust to different measures of corruption.