Governance, productivity and economic development

ArXiv ID: 2507.13099 “View on arXiv”

Authors: Cuong Le Van, Ngoc-Sang Pham, Thi Kim Cuong Pham, Binh Tran-Nam

Abstract

This paper explores the interplay between transfer policies, R&D, corruption, and economic development using a general equilibrium model with heterogeneous agents and a government. The government collects taxes, redistributes fiscal revenues, and undertakes public investment (in R&D, infrastructure, etc.). Corruption is modeled as a fraction of tax revenues that is siphoned off and removed from the economy. We first establish the existence of a political-economic equilibrium. Then, using an analytically tractable framework with two private agents, we examine the effects of corruption and evaluate the impact of various policies, including redistribution and innovation-led strategies.

Keywords: General Equilibrium, R&D, Corruption, Fiscal Policy, Heterogeneous Agents, Macro / Economy

Complexity vs Empirical Score

• Math Complexity: 8.0/10
• Empirical Rigor: 2.0/10
• Quadrant: Lab Rats
• Why: The paper is mathematically dense, featuring a general equilibrium model with heterogeneous agents and rigorous proofs of equilibrium existence using fixed point theorems, while empirical rigor is low as it relies on a theoretical framework with only two private agents and lacks backtesting, datasets, or statistical metrics.

  flowchart TD
    A["Research Goal<br/>Interplay of fiscal policy, R&D,<br/>corruption, and economic development"] --> B["Methodology<br/>General Equilibrium Model"]
    B --> C["Data/Inputs<br/>Heterogeneous Agents &<br/>Government Parameters"]
    C --> D["Computational Process<br/>Existence of Equilibrium Analysis"]
    D --> E["Computational Process<br/>Policy Simulations<br/>(Redistribution, Innovation, Anti-Corruption)"]
    E --> F["Key Outcomes<br/>Corruption reduces productivity<br/>Innovation-led growth outperforms pure redistribution"]