Modelling Corruption in a Cobb-Douglas Production Function Framework

Abstract

In this paper, we extend the Solow growth model to include corruption as a determinant of the multifactor productivity using a Cobb-Douglas production function framework. In addition to the classical components of any growth model (output, labor, capital), we incorporate corruption as a determinant of government expenditure, investment and foreign aid. It is proposed that output and growth are influenced by the level of corruption. This model is to be tested empirically to trace the corruptive behaviour in Lebanon based on the available time series data.Corruption, economic growth, investment, government expenditure, foreign aid, International Development,