This chapter was a theoretical construct on corruption within the context of long-run growth. It stressed and expounded the quality implications of corrupt practices for full capacity output. Rational behavior of economic agents was assumed and the typical capitalist economy was the setting. The ultimate channel of the effect of corruption on long-run growth was a declining total factor productivity growth that in turn caused the full information natural rate level of output to fall below full capacity output. Both the investment and human capital transmission mechanisms of corruptive practices were focused with trappings of institutional corruption discernible in the two cases. Different permutations and likely results were indicated and analyzed. The overall conclusion was that corruption was undesirable from the perspective of long-run growth.
Part of the book: Off and Online Journalism and Corruption