Assess the effects that corruption may have on economic development. How do you reconcile the anecdotal evidence with theoretical ideas? Introduction The World Bank defines corruption as: “abuse of public office for private gains”1. Corruption is seen to be an integral part of human society and demonstrates itself through a variety of ways – bribing politicians, using kickbacks or tipping a waiter in a restaurant to get a better table are all examples of corruption. Corruption is generally seen as an important factor that hinders the economic development of an economy. Overwhelming amount of literature, through presenting empirical and anecdotal evidence, argues that corruption reduces the efficiency, economic growth, domestic and foreign direct investment (FDI), disadvantages the poor, reshapes the government spending to an unsustainable way and is generally harmful for the economy. A small proportion of literature on corruption, however, presents rigorous arguments in favor of corruption- presenting evidence that corruption may actually “speed up the wheels of commerce” Wei (1998) and hence stimulate economic growth. My essay is based on the assumption (which most of the authors on corruption agree on) that generally – corruption is harmful for the economy, however one should distinguish the effects of corruption on a developed and developing economy. The main argument of my essay is that there is a major distinction between effects of corruption on developed and developing economies in the short and long terms. Corruption will cause major economic inefficiency in a developed economy, however may bring some positive effects in the short term to the developing economies. Efficiency, Economic Growth and Corruption “Corruption can be like “grease” speeding up the wheels of commerce” Wei (1998) – this is formal summarizing statement along the lines of Leff (1964),