Corruption and extreme wealth. Evidence at country level

Abstract

The aim of the paper is to demonstrate that extreme wealth at country level is a consequence of corruption for a set of 42 countries over the period 2005–2018. A dynamic estimation (sys-GMM) is conducted, and different indices of corruption are used in order to obtain solid results. The data on extreme wealth is taken from Forbes annual listing of billionaires. The main findings are highly supportive of the idea that corruption fosters extreme wealth, acting as a greasing wheel that contributes to this unbalanced economic process. Therefore, billionaires face incentives to perform these types of acts which tend to perpetuate the corrupt system. However, legal mechanisms are also significant determinants of extreme wealth. Results also confirm that factors such as economic freedom and its components, as well as other economic and political variables, have positive effects on this wealth.