Necessary corruption: when the ends justify the means, a study of Latin America

Corruption has always been an ambiguous phenomenon that has prompted continuing theoretical debate within economics. The purpose of this thesis is to find synergy within the current literature and to build an extended model of corruption. The first study explores the corruption literature through the application of a meta-analysis, which shows extreme heterogeneity and is likely the underlying reason for the divide and indefinite evidence presented throughout the literature. The second study presents an extended theory of corruption, providing empirical evidence to support the existence of two types of corruption that exist simultaneously and impact economic growth in opposing directions – rent seeking generated by greed or self-interest, and systemic corruption as solution to market failures. This analysis applies Structural Equation Modelling and employs both causal and indicative variables to test for existence of two types of corruption (as latent variables) in Latin American from 1980-2018. This study adopts insights from economic anthropology for the inclusion of cultures and social norms into the study of corruption. The thesis findings indicate that future economic research and policy applications need to be assessed at a more granular level for the eradication of corruption.