Chapter 8, Problem 8Q

To determine

Which relationship would you expect to exist between measures of corruption and living standards at the country level? Explain by which channel corruption might affect living standards?

Concept Introduction:

Corruption is a process where one or more entities in an economy misuse their power for their personal advantage without considering the advantage of the citizens. Government authorities, financial intermediaries, business entities, political parties, etc. usually misuse their power.

The living standards are decided by many factors of the economy. However, the basic factor is per capita income and economic growth.