Two separate literatures suggest that corruption and social trust, respectively, are related to economic growth, although the strengths of the relationships, and the direction of causality, are still debated. In this paper, we review these literatures and evaluate the evidence for causal effects of corruption and trust on economic growth, and discuss how corruption and trust are interrelated. The reviews show that absence of corruption and high levels of social trust foster economic growth. The literatures also indicate that corruption has a causal effect on social trust, while the opposite effect is more uncertain. In the conclusion, we offer the suggestion that fighting corruption may yield a “double dividend”, as reduced corruption is likely to have both direct and indirect effects on growth.
Journal of Comparative Policy Analysis, 2014, Vol 16, Issue 2, p. 121-139