The State of Corruption: Crony Capitalism Negatively Impacts Economic Output at the State Level

Recently, there have been several initiatives to address corruption at the international level. However, there have been signals at the state level to suggest that corruption is negatively impacting the United States. While technological advancements have increased production levels, hourly wages have remained stagnant. It is crucial that we better understand corruption at the state level because it is associated with slow economic growth. This paper aims to investigate if evidence in support of the following hypothesis can be found: among the fifty United States, governments that show higher levels of corruption will tend to exhibit lower levels of yearly GDP per capita. This paper extends the previous literature done on the topic by using relevant theoretical models to construct a conceptual regression model that describes the relationship between political corruption and growth at the state level. I will specifically make use of three economic models to support my hypothesis: a theory on Bureaucratic Behavior, Rent-Seeking Behavior, and the Solow Growth Model. Given this theoretical approach and previous significant research done on the topic, I will then construct my own conceptual regression model to test for my proposed hypothesis. The results of this study find significant decrease in GDP per capita, a reduction educational attainment, and an increase in unemployment rate amongst other variables. My results suggest that corruption should be addressed at the state level to better encourage economic prosperity in the United States