Higher corruption reduces growth, which reduces investment. Centralized corruption is a top down approach that brings in more money to corrupt officials but hurts an economy less. Decentralized hurts the economy more, brings in less money to officials, and is more difficult to kill.
Ethnic diversity, foreign aid, and commodity markets generally cause more corruption.
The keys to ending corruption are creating a high quality bureaucracy, which includes a meritocratic civil service and imposes “hard and fast” rules for government.
I believe that whether corruption is decentralized or not, punishment should be severe for corrupt officials and salaries should be raised dramatically. This would reduce the incentives for corrupt activity.
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