The impact of corruption on investment: Predictability matters

This paper argues that it is not only level of corruption that affects inve stment but also the nature of corruption. Corruption regimes that are more predictable-in the sense that those seeking favors from government do obtai n those favors-have less negative impact on investment than those that are less predictable. Using the data collected by World Bank in preparing the W orld Development Report of 1997, we provide empirical support for the conje cture. (C) 1999 Elsevier Science Ltd. All rights reserved.