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Asma Sghaier and Asma Guizani

This chapter focuses on the interrelations among corruption, human capital, and economic growth in developing countries. Whereas the literature on corruption is dominated by Western scholars, the authors offer an Islamic interpretation. The chapter also summarizes the different causes of corruption, as well as the impacts, focusing on the creation of human capital. The authors use a Cobb-Douglas production function to examine corruption’s relations to economic growth and institutional variables empirically. They show that corruption and the growth of human capital are simultaneously determinant: corruption impedes the creation of skills by discouraging the young from pursuing their studies, which in turn facilitates corruption.