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Corruption is negatively correlated with investment and political stability<ref>Paolo Mauro, 1995, Corruption and growth, The Quarterly Journal of Economics</ref>
==Kiltgaard Equation==
C = R+D-A<ref>Klitgaard 1998</ref>
will be the corruption. However, the more administrators are held accountable (A)
for their actions, the less will be the corruption, and hence a minus sign in front
of A.1 Stated differently, the equation tells us that a fertile ground for growth of athoroughly corrupt system will emerge in a country if it satisfies the following threeconditions: # It has a large number of laws, rules, regulations, and administrativeorders to restrict business and economic activities and thereby createshuge opportunities for generating economic rent, and especially ifthese restrictive measures are complex and opaque and applied in aselective, secretive, inconsistent and non-transparent way;# Administrators are granted large discretionary powers with respect tointerpreting rules, are given a lot of freedom to decide on how rulesare to be applied, to whom and in what manner they are to be applied,are vested with powers to amend, alter, and rescind the rules, andeven to supplement the rules by invoking new restrictive administrativemeasures and procedures; and# There are no effective mechanisms and institutional arrangements inthe country to hold administrators accountable for their actions.
==References==