The interplay of corruption and innovation in emerging economies
The paper analyses effects of corruption on innovative activities. It argues that despite corruption is traditionally considered as a highly negative phenomenon, it may have a positive effect on innovation. This position allows to explain why developing countries with a high level of corruption sometimes demonstrate better indicators of innovative activity in particular areas than less corrupt advanced economies. However, our study shows that this positive relationship exists because of the prevalence of more serious problems associated with the persistent presence of the state in various spheres of economy. Moreover, we argue that not all innovations are in fact socially desirable, and those that are an outcome of rent-seeking behavior and incorporation of private interests in the legal system often negatively affect market mechanisms and undermine sustainable economic performance.