The rise of Institution Economics inspires economists’attention to corruption.Once the friction due to the institutional disfigurement hinders the wheel of economic growth，does corruption，the reason and the result as well of the institutional disfigurement，act as grease or sand of the crunch-crunch wheel？From the 1950s，west researchers began to find the answer and formed two different opinions.One believes that corruption can improve economic efficiency，and another believes that corruption hampers economic growth.From the 1980s，the economic transition in China，Central and Eastern Europe caused the widespread breed and spread of corruption.Corruption has great effects on public expenditure structure，domestic private investment，foreign direct investment，foreign trade，foreign aids，domestic financial system and financial crisis，thus affects economic growth，income distribution and economic security.

Corruption is not due to economic reform，but the reform and open stimulates the wide spread of corruption in China indeed.China's CPI remains below 3.5 from 1995，so it belongs to the list of the relative corrupt countries on the world.Moreover，due to the low grading of BPI，China always goes to the bottom of the sample countries，which shows the great propensity of China's entrepreneurs to bribe.From the data of CI，the level of corruption in 30 provinces and municipalities in China has been very high at the end of the 1980s and the very beginning of the 1990s.In the following years，it eased somewhat.However，the level of corruption began to rise slowly after 2000.

Multiple researches show that the scale and structure of public expenditure have some effects on economic growth.The effect of the former is uncertain，but the effect of the latter is remarkable.Productive expenditure improves economic growth，while rent-seeking expenditure results in lower efficiency and waste of resources.In China，the scale of public expenditure in all provinces and municipalities expands greatly and accords with the Wagner's Law.However，the unbalance of expenditure structure is obvious and solidified.In detail，the ratios of the administration expenditure，policy-related subsidies expenses and urban maintenance expenditure to the total expenditure are very high and increase year by year.On the contrary，the ratios of the expenditure for science and technology promotion and the expenditure for education，culture and health are too small.At the same time，the scales and structures of public expenditures are different in different economic regions.From the viewpoint of expenditure scale，the more developed east region has greater scale of public expenditure，while the less developed medium and west regions have relatively higher public expenditure per capita.From the viewpoint of expenditure structure，the provinces and municipalities in west region expend more on infrastructure，science，education，culture and health than east and medium regions.But the administration expenditure is much higher in west region too.

Corruption restrains economic growth by means of affecting the public expenditure.How does and how can corruption influence the public expenditure scale，structure and efficiency？Will the influence spread to economic growth？And if the negative effects of corruption do exit，how can the government control corruption？Can the government control corruption by reducing the government intervention，improving the extent of marketization，privatization，internationalization and educational level，and carrying out efficiency wage？All should be answered in the research.

Based on CI-an objective evaluating indicator of corruption，the book analyzes the effects of corruption on the scale，structure and efficiency of public expenditure .The model concludes that more corrupt governments tend to expend less，at the same time，the efficiencies of all kinds of public expenditure will be lower.However，public expenditures on rent-seeking sectors increase.To test the results empirically，the book studies the data of corruption indexes and kinds of public expenditure in 30 provinces and municipalities from 1989 to 2004.Then，the book combines 12 indexes to show the effects of government intervention，marketization，efficiency wage，educational level and economic growth on anti-corruption，which provides the policy suggestions for controlling corruption.

The book consists of eight chapters，which are organized as follows：

ChapterⅠ is an introduction.It shows the backgrounds，research motives，research methods and main contents，as well as the innovations and short-comings.

ChapterⅡ is a literature summary.Economic analyses on corruption usually focus on three topics.One is the definition of corruption.Though numbers of researchers，research institutes and surveys define corruption differently，most of them look corruption as”the abuse of public power for private interests”.From the generalized view，corruption can be defined as the behavior that the person with public power misuses public power for private interests，which hurts the public interests.From a narrow sense，corruption can be considered as the misuse of public power by the public officials.The second topic focuses on the causes of corruption.Economic and noneconomic factors induce the spread of corruption.The former includes trade restrictions，government subsidies，price controls，low official wages and differences in natural resources，and the latter includes some political，cultural，religious，ethnic and gender factors.The third topic is the economic effects of corruption.Besides of economic efficiency，corruption can affect economic growth，international trade，capital formation and foreign aids greatly.But divergences exist in available researches based on different samples and measures.

Chapter Ⅲ constructs a corruption index system.To avoid the bias of existing corruption indexes based on subjective assessment，such as GCR index，ICRG index，CPI and so on，the book tries to build up a new，objective corruption index of China.The corruption index is based on five objective indexes and three reference indexes.The five objective indexes include the number of corruption cases，the number of huge corruption cases，the amount of money involved in corruption cases，the number of corrupt mid-governmental officials and the number of corrupt officials in administrative organs，party organs，judicial organs and economic management departments.All the indexes have direct relation with corruption.The reference indexes include GDP per capita，urban Engel Index and rural Engel Index.，which have indirect relation with corruption.Based on two kinds of technical measures，the Analytic Hierarchy Process（AHP）and Artificial Neural Networks（ANN），the book builds up two relatively objective corruption indexes.Compared with CPI，CI calculated by ANN is more suitable and adopted at last.

Chapter Ⅳ is the empirical test on the effects of corruption on the scale of public expenditure and economic growth.The book firstly outlines the basic condition of the increasing of total public expenditure.Secondly，based on CI constructed in Chapter Ⅲ，the paper builds up a Model of Simple Regression to analyze the effects of corruption on the scale of public expenditure and economic growth.The results show that corruption constraints economic growth and the scale of public expenditure.

ChapterⅤ is a dynamic model of corruption.Based on reviewing the classical models of Barro（1990）and Ehrlich ＆ Lui（1999），the book aims to improve the effects of corruption on public expenditure structure empirically by means of a dynamic growth model including corruption.In the model，corruption is considered as tax levied on investment，so it’s endogenous.Households can choose between working either in the productive sectors or in the rent-seeking activities.The public capital and investment can divided into productive type and physical type.When the revenue from the two types of activities equals，the economy reaches equilibrium.At the equilibrium point，the level of corruption has negative effects on the ratio of productive public investment to physical public investment as well as GDP per capita.

ChapterⅥ analyzes the co-relationship between corruption and different kinds of public expenditures to test the effects of corruption on the ratio of infrastructure expenditure，administration expenditure，urban maintenance expenditure，expenditure for technical updates and transformation in enterprises，expenditure for science and technology promotion，expenditure for education，culture and health，expenditure on social pension and welfare and expenditure for subsidize rural production to the total public expenditure，which can measure the distortion effects of corruption on public expenditure structure quantitatively.

Chapter Ⅶis the empirical analysis on anti-corruption policies.Based on the existing studies on anti-corruption，the book divides the policy tools of anti-corruption into five kinds such as government behaviors，marketization，efficiency wages，educational levels and economic growth.The five factors can be shown by the ratio of local government public expenditure to national government public expenditure，the ratio of public expenditure to local GDP，the ratio of administration expenditure to public expenditure，the ratio of expenditure on science，education，culture and health to public expenditure，the ratio of investment by non-state-owned economy to the social investment on fixed assets，the ratio of employment in non-state-owned economy to the total employment，the ratio of FDI to GDP，the ratio of foreign trade to GDP，the relative wages of public officials，the number of college students per million person，the growing rate of GDP and urban per capita disposable income.Then the paper uses a fixed effect model to analyze the effects if the above 12 factors on controlling corruption.

Chapter Ⅷ includes the main conclusions and policy recommendations.Based on the proceeding results，the paper suggests of controlling corruption by building good economic，political，legal，regnlation culture and international environmental circumstances.

The main conclusions are as follows：

Firstly，corruption has obvious negative effects on the scale of public expenditure and economic growth.The simply co-relationship analysis shows that when CI improves 1%，GDP per capita drops 0.628% and the scale of public expenditure increases 0.125%.The former result is in accordance with the results of proceeding studies，but the latter is totally on the contrary with related research，which may due to the special economic and financial system in China.

Secondly，corruption distorts public expenditure structure，and then hampers economic growth.The dynamic growth model of corruption demonstrates that a corrupt government tends to expend on rent-seeking sector，where corruption is prevalent.The book uses a simple containing 3840 datus to analyze the effects of corruption on the ratios of different public expenditure to the total expenditure.The results show that corruption has obvious positive effects on infrastructure expenditure，administrative expenditure and urban maintenance expenditure，but has obvious negative effects on expenditure for science and technology promotion，expenditure for education，culture and health，and expenditure on social pension and welfare.When the level of corruption improves 1%，infrastructure expenditure，administrative expenditure and urban maintenance expenditure will increase respectively 0.132%，0.145% and 0.345%.On the contrary，expenditure for science and technology promotion，expenditure for education，culture and health，and expenditure on social pension and welfare will drop respectively 0.143%，0.14% and 0.082%.

Finally，various measures have different effects on controlling corruption.Drawn from the proceeding theoretical researches and policy operation，there’re a variety of anti-corruption policies，which have different effects.The book empirically tests the practical effects of 12 policy tools on controlling corruption.The results show that decreasing government intervention，cutting down rent-seeking expenditure，improving the degree of marketization can achieve remarkable success in controlling corruption.However，improving the public officials’wages，the level of education and the degree of internationalization cannot do much in anti-corruption.

Key Words：Corruption，Public Expenditure，Economic Growth，Control Corruption