Bribery of public officials remains a major problem across the developing world and in some developed countries, too.
Studies have repeatedly shown that graft impedes economic growth and development, prompting governments around the world to intensify their efforts to root out corruption. China’s anti-corruption drive stands out in this regard, having led to the arrest or indictment of hundreds of high-ranking officials, as well as more than a million lower-level government representatives, since 2013.
Corruption increases the cost of doing business, impeding economic efficiency and undermining fairness across the economy and society. But, given that bribery typically occurs under the table, estimating the extent and scope of illicit earnings is extremely difficult. One way to do this is to apply the permanent income theory, which establishes a link between household wealth and big-ticket consumer purchases.