Can it ever happen that an anti-corruption drive which leads to government action becomes detrimental to the economy?

Is there any example?

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    I upvoted your question, but a caveat I see is that "anti-corruption drive" can be just a moniker for something else in some cases. – SX welcomes ageist gossip Sep 3 '18 at 4:17
  • Please clarify what "drive" signifies here, it might mean protests, campaigning, petitions, lobbying, referendums, legislation, or customs and culture. – agc Sep 3 '18 at 11:18
  • @agc, government action. – user21304 Sep 3 '18 at 11:23
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    Please keep in mind that "The economy" is an amazingly complex web of interactions which gets influenced by a huge array of circumstances. It is often extremely difficult to prove or disprove that a certain action had a certain effect on the economy. – Philipp Sep 3 '18 at 14:15
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    Probably, yes. I think that you can answer "yes" to every "Is X sometimes bad for Y?" Voted to close as too broad. – user11249 Sep 3 '18 at 15:03

Yes, it can be detrimental to the economy, at least on the short term

Bloomberg has a small article about several examples within Latin America, but I will one example from Brazil (Operation Car Wash):

Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, reckoned the fallout from the Carwash case deepened Brazil’s historic recession, shaving as much as 2 percent of gross domestic product in 2015. “The construction sector is stalled, Petrobras is recovering but struggling, and other sectors have taken a hit,” de Bolle told me. “A cleanup is inevitably messy. You have to hope that you clear the slate enough so that the economy can grow again.”

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  • Could you link the article? Is the fallout mainly in the form of worsening investor confidence, or are there other factors? – IllusiveBrian Sep 3 '18 at 16:03
  • @IllusiveBrian - yes, linked it. Thanks for pointing it out that it was missing. – Alexei Sep 3 '18 at 16:04
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    To generalize this: If corruption has caused a significant portion of the economy to be diverted, then correcting the corruption will likely cause a shift in the economy towards a more natural state. All such shifts have a near-term cost, but the point is that we should blame the corruption for this disruption, and not the attempts to amend corruption. – EvilSnack Sep 3 '18 at 16:18
  • @EvilSnack - yes, of course it should pay off on the long term. That is why I mentioned the short term. – Alexei Sep 3 '18 at 16:19

So far, there is not a single country in the world that plunge into heavy corruption willing to change the country policies to reduce or get rid of the cronies oligarchy. In many country with corruption perception index score lower than 50, anti-corruption is used as political tools than a policy tools, which the anti-corruption policies and the associate authority body is ambiguous.

In such country, any "anti-corruption" practice will lead investor take "wait and see stance", to see who will be the new oligarch that they can deal with after the power shuffle, which will cause detrimental to the country economy.

In common sense, no "economic analyst" is required to tell you the outcome hindsight for such country.

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