IN UNDERDEVERLOPED NATIONS, THE GOVERNMENT HAS PRIMARY RESPONSIBILITY FOR ECONOMIC GROWTH, AND ATTEMPS TO INFLUENCE ITS OFFICIALS THROUGH DISHONESTY AND GRAFT ARE OFTEN CONSIDERED DETRIMENTAL TO EFFICIENCY AND MODERNIZATION. POLITICIANS HAVE AN INTEREST IN ELIMINATING CORRUPTION SINCE IT CAN ERODE THE INFLUENCE OF THE DOMINANT POLITICAL PARTY, PARTICULARLY IN A COUNTRY WITH ETHNIC MINORITIES OR FOREIGN ENTREPENEURS. BUSINESSMEN DISLIKE CORRUPTION SINCE IT TENDS TO FAVOR THE MOST EFFICIENT PRODUCER AND REDUCES PROFITS. HOWEVER, CORRUPT BUREAUCRATS CAN FORCE THE GOVERNMENT TO BECOME INVOLVED IN PROMOTING ECONOMIC ACTIVITIES AND CAN MAKE A HIGHER RATE OF INVESTMENT POSSIBLE BECAUSE INVESTORS NEED ASSURANCES OF NONINTERFERENCE IN THEIR AFFAIRS. CORRUPT PRACTICES MAY PERMIT INNOVATIONS THAT WOULD HAVE BEEN OPPOSED BY EXISTING ECONOMIC INTERESTS. THE LIMITED SUPPLY OF LICENSES AND OTHER FAVORS THAT A BUREAUCRAT CAN BESTOW PRODUCE A COMPETITIVE SITUATION THAT CAN ENCOURAGE EFFICIENT PRODUCTION. CORRUPTION CAN ALSO PROVIDE SAFEGUARDS AGAINST SERIOUS POLICY ERRORS. FOR EXAMPLE, WHEN ENTREPENEURS SABOTAGED THE GOVERNMENT'S PRICE CONTROL POLICY IN BRAZIL, FOOD PRODUCTION INCREASED AND INFLATION SLOWED SLIGHTLY. THOSE WHO ARGUE AGAINST CORRUPTION, PARTICULARLY TAX FRAUD, INCORRECTLY ASSUME THAT THESE REVENUES WOULD BE USED FOR ECONOMIC DEVELOPMENT. ALTHOUGH CYNICISM CAUSED BY CORRUPTION IS SAID TO HINDER DEVELOPMENT AND LOWER PUBLIC MORALE, SUCH SELF-SEEKING ATTITUDES ACTUALLY STIMULATE ACTIVITIES WHICH PRODUCE WEALTH. THE BUREAUCRACY CANNOT BE EXPECTED TO GUIDE ECONOMIC GROWTH, AND ELIMINATION OF CORRUPTION IN MANY COUNTRIES CAN OCCUR ONLY AFTER A LONG PERIOD OF SOCIAL AND ECONOMIC DEVELOPMENT. ALTERNATIVE METHODS THAT DO NOT RELY ON ADMINISTRATIVE INVOLVEMENT COULD BE EMPLOYED TO EXECUTE GOVERNMENT ECONOMIC POLICIES, SUCH AS PERMITTING LIMITED COMPETITION FROM EXPORTS OR CURRENCY DEVALUATION. REFERENCES ARE PROVIDED. (MJM)