Elisa Gamberoni, Christine Gartner, Claire Giordano, Paloma Lopez-Garcia, 21 October 2016

Economists have argued that corruption in business can potentially grease the wheels of an economy. This column presents evidence from nine Central and Eastern European countries on the effects of bribes on the efficiency with which production factors are allocated across firms. The impact of corruption on capital and labour misallocation is larger the smaller the country, the lower its political stability and the weaker the quality of its regulation. This is evidence against the ‘grease the wheels’ hypothesis.

David Bloom, Michael Kuhn, Klaus Prettner, 20 October 2016

Africa’s total fertility rate and its dependency ratio have been falling since the 1980s, and are projected to fall further. This column looks at the potential growth effects of the continent's changing demography. The African economy has the potential to grow between 0.5 and 2 percentage points faster over the next five decades than it would without the projected fertility reduction. However, this 'demographic dividend' is dependent on the policies that African governments enact.

Eugene Bempong Nyantakyi, Mouna Ben Dhaou, Lamin M Drammeh, Mouhamadou Sy, 08 October 2016

Boosting Africa’s intra-regional and international trade requires a good understanding of the African trade finance landscape, including the identification of markets where the need is greatest. This column presents some of the major patterns of the market in Africa using primary survey data from commercial banks. Banks intermediate almost a third of trade activities across the continent, but still reject a significant value of trade finance applications mainly due to weak client creditworthiness and inadequate collateral.

Daron Acemoglu, Leopoldo Fergusson, James Robinson, Dario Romero, Juan F. Vargas, 06 October 2016

A major problem in many poor countries is lack of state capacity to control violence, enforce laws, tax and regulate economic activity, or provide public services. This column uses the example of Colombia to assess the effectiveness of top-down state-building strategies that prioritise military objectives ahead of all others. Such approaches may not only fail to develop other crucial aspects of state capacity, but may also lead to deteriorations in these incipient capacities.

Julia Ruiz Pozuelo, Amy Slipowitz, Guillermo Vuletin, 30 September 2016

The debate over whether democracy causes economic prosperity and growth dates back millennia. Recent empirical results suggest that democratisation has a sizable positive effect on economic growth, but endogeneity and reverse causality may be driving these results. This column uses new data from surveys of democracy experts to solve the endogeneity puzzle. The positive association between democracy and economic growth is a reflection of economic turmoil causing the emergence of democratic rule, rather than democracy causing more economic growth.

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