A major puzzle in the discussion of the corruption-growth nexus is the combination of rapid growth and high levels of perceived corruption in many Asian economies. Over the period 1996 to 2011 the average GDP pc growth rate of a sample of Asian economies has exceeded the average growth rate in a sample of African countries with very similar levels of perceived corruption more than eightfold (Figure 5). Statistical analysis by Rock and Bonnett (2004) corroborates this observation: testing the impact of corruption on growth and investment in seven large Asian developing countries separately from its effect in other small(er) developing countries, the authors find a positive and significant correlation between the level of perceived corruption and GDP per capita growth in the large Asian economies.Various analysts have attempted to explain this phenomenon.2 Whatever the underlying reasons explaining the remarkable growth performance of these countries, the relevant question is whether and why the observed growth cum corruption regime is more successful in generating rapid growth, and if so, why this advantage is exploited in the large Asian countries, but not elsewhere. Another question is whether this growth performance achieved under the corruption cum growth regime at the early stages of development can be maintained as these economies move towards being developed. While a number of arguments have been put forth to understand the causes of the Asian Paradox, a concrete explanation leading to firm policy conclusions has so far not been found .3 More generally, several different mechanisms through which corruption may have a positive effect on output have been identified. For instance, if existing government rules and procedures are detrimental to growth, (Leff, 1964) or where their slow implementation may delay transactions and thus reduce efficiency (Batabyal and Yoo, 2007), bypassing them through corruption may actually benefit growth. However, the correct response would be to remove or modify the inefficient rules rather than tolerating corruption, which always has negative effects on general trust in the government and its legitimacy, as well as adverse effects on income distribution. Similarly, corruption in the form of theft of publicly-owned assets may lead to an increase in output if the new proprietors of the asset exploit it more efficiently. The efficiency-enhancing consequences of transferring productive assets from the public to the private sector have been studied extensively in the context of economic reforms in transition economies (Ehrlich et al., 1994). Little is known, however, about whether and how the legal modalities of this asset transfer influence their effect on output. In any case, it would seem counterproductive to defend theft and embezzlement of public property as a viable growth strategy, as it fatally compromises the “rule of law” – which is a key component of public sector governance.2 See Marazza (2006); Rock and Bonnett (2004); Ugur and Dasgupta (2011). Their explanations combine a number of specific characteristics of corruption which are based on theoretical classifications developed by earlier analysts. Most of these explanations, however, provide reasons why corruption in the countries concerned is less detrimental than it could be, rather than arguing convincingly that it makes a positive contribution to efficiency and growth .3 In this context, it is also interesting to observe that over the period 1927 to 1946 the average growth rate in the Soviet Union exceeded that in the United States, but the socio-economic regime which produced this result proved increasingly less capable of sustaining growth in the post-war period. Similarly, the crony capitalism that characterises rapid growth regimes in many Asia economies today also prevailed in Korea and China’s Taipei at an earlier stage of their development. As these countries moved into the group of higher-income countries, characterized by more sophisticated technologies and innovation, their perceived corruption rating had improved. How Corruption Helps- According to Leff (1964) and Huntington (1968), allowing individuals to pay bribes to public officials in order to avoid inefficient rules and bureaucratic delays, corruption enhances economic growth. According to these authors, in some developing countries, “corruption is necessary to get things done.”4 If reducing corruption is not associated with changes that include the elimination of ineffective rules, the business activity and economic growth could slow. Corruption acts as a “piece of compensation for bureaucrats which indicates a more efficient provision of government services and provides margin of maneuver for entrepreneurs to bypass the ineffective regulations”, which improves the efficiency of an economy. Lui (1985 ) shows that corruption can reduce the waiting time. Bureaucratic delays can impede business training. Bypassing the rules ineffective, corrupt officials can take to improve growth.Most of us fail to imagine that corruption can also grease the wheels of prosperity.5 Yet in places where bureaucracies and organizations are inefficient (meaning entrepreneurs and big firms struggle to transport or export or comply with regulation), corruption could improve efficiency and growth. Bribes can act like a piece rate or price discrimination, and give faster or better service to the firms with highest opportunity cost of waiting.But it’s important to understand that because we live in an imperfect world, a bit of controlled corruption can function as a lubricant 6 to overcome some of our worst problems.The World Bank has found that countries with more predictable corruption have higher investment rates 7. Thus, countries with endemic but predictable corruption, such as Thailand and Indonesia, have had strong investment growth. In many countries corruption can be seen as a natural response to shortages. Often in developing countries the demand for a service such as access to the courts, education, healthcare, or the attention of civil servants and politicians far outstrips the ability of public officials to cope. To prevent the system from grinding to a complete halt, a way of rationing has to be found and corruption provides such a system. In effect it places a price upon a service and enables officials to prioritize and go at least some way towards dealing with all the demands upon their time and resources.