**2. Literature review**

The theoretical and empirical literature on corruption has generated a rich debate over the last 40 years. This literature can be summarized in two opposing theories. The first assumes that corruption "lubricates the economic cycle" or "greases the economic wheel" and produces the most efficient economies [5–10]. In contrast, the second theory blames corruption and sees it as a factor that slows down economic activity [11–14].

Mauro [15] detects a weak statistical significance between corruption and economic growth. However, this significance disappears once investment rate is introduced in the model. Mo [13] finds that corruption negatively affects economic growth. However, the additional introduction of variables such as investment to GDP ratio, political stability, and human capital weakens or eliminates the significance of this negative impact.

Aidt et al. [16] show that the impact of corruption on economic growth depends on institutional quality. Moreover, they show that when political institutions are of low quality, corruption has little impact on growth. On the other hand, Méndez and Sepúlveda [17] find that high-quality political institutions result in corruption being harmful to growth. In accord with Méndez and Sepúlveda [17], Heckelman and Powell [8] find that at the lowest levels of democracy, corruption is harmful to growth but becomes less harmful and eventually beneficial as the level of democracy increases.

Méon and Weill [10] emphasize the hypothesis of the lubricating effect of corruption by studying the interaction between institutional quality, corruption, and production efficiency, thereby validating the hypothesis that corruption may have a positive effect on economic activities. In the same context, Kato and Sato [18] provide evidence supporting the "greasing the wheels" hypothesis and argue that corruption enhances economic growth.

Mushfiq [14] tests corruption-growth relationship in a nonlinear framework. He shows that corruption increases growth even at a higher level of corruption. In the same context, Allan and Roland [19] use linear and nonlinear panel methods over the period 1998–2009 for determining the causal relationship between economic growth and corruption in 42 developing countries. Moreover, Aghion et al. [20] show that corruption affects the marginal effect of taxation on growth.

Huang [21] examines the causal relationship between corruption and economic development in 13 Asia-Pacific countries and finds that South Korea and China are experiencing economic advancement despite high-corruption levels.

Trabelsi and Trabelsi [22] show that beyond an optimal threshold, both high and low corruption levels can decrease economic growth. Under this optimal threshold, a moderate level of corruption, defined by the point of reversal of the curve of the marginal corruption effect on growth, could have advantages for economic growth.

All these studies indicate that corruption may have either positive or negative effects on economic growth, making the issue ambiguous and confirming the nonlinearity of the relationship between corruption and growth. However, one must ask to what extent can corruption be tolerated and from what threshold would it become destructive to the economy. The questioning is motivated by the fact that studies do not test whether there is a growth-enhancing or growth-reducing level of corruption, and not one study thoroughly identified the corruption level that will allow an optimal growth.
