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Economic growth and corruption in emerging markets: Does economic freedom matter?

Author

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  • Leonardo Köppe Malanski
  • Angela Cristiane Santos Póvoa

Abstract

This study analyzes the effects of corruption on economic growth for different levels of economic freedom. The effects of corruption on the economy, which can increase or decrease growth, were tested in emerging countries in Latin America and Pacific Asia, between 2000 and 2017, through one-step System-GMM estimation panel data regressions. The results showed that economic freedom works as a moderator in the relationship between corruption and economic growth. On both continents, greater economic freedom, on average, supports the growth of GDP per capita. In Latin America, it was possible to corroborate the hypothesis that corruption damages countries with greater economic freedom but favors economic growth in countries with lower economic freedom levels. Regarding the Asian countries studied, there was only a negative effect of corruption on economic growth in countries with less economic freedom. When comparing this reality with the one in Latin America, it was observed that in terms of development, the countries in this continent are in earlier stages compared to the Asian countries, even though both country groups are called “emerging.”

Suggested Citation

  • Leonardo Köppe Malanski & Angela Cristiane Santos Póvoa, 2021. "Economic growth and corruption in emerging markets: Does economic freedom matter?," International Economics, CEPII research center, issue 166, pages 58-70.
    • Handle: RePEc:cii:cepiie:2021-q2-166-4
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    File URL: https://www.sciencedirect.com/science/article/pii/S2110701721000123
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    Citations

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    Cited by:

    1. Ofori, Isaac K. & Figari, Francesco & Ojong, Nathanael, 2023. "Towards sustainability: The relationship between foreign direct investment, economic freedom and inclusive green growth," MPRA Paper 116956, University Library of Munich, Germany.
    2. Helmi Hamdi & Abdelaziz Hakimi, 2023. "Corruption, imported innovation, and growth: Evidence using the panel smooth transition regression approach for developing countries," Regional Science Policy & Practice, Wiley Blackwell, vol. 15(5), pages 956-972, June.
    3. Anh‐Tuan Doan & Bich‐Thanh Truong & Chi‐Cuong Nguyen & Phan‐Tam‐Nhu Nguyen & Hai‐Yen Truong & Anh‐Tuan Le, 2023. "Corruption and corporate leverage in an emerging economy: The role of economic freedom," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(2), pages 599-629, June.
    4. Isaac K. Ofori & Francesco Figari & Nathanael Ojong, 2023. "Towards sustainability: The relationship between foreign direct investment, economic freedom and inclusive green growth," Working Papers 23/023, European Xtramile Centre of African Studies (EXCAS).
    5. Isaac K. Ofori & Francesco Figari & Nathanael Ojong, 2023. "Towards sustainability: The relationship between foreign direct investment, economic freedom and inclusive green growth," Working Papers of the African Governance and Development Institute. 23/023, African Governance and Development Institute..
    6. Dokas, Ioannis & Panagiotidis, Minas & Papadamou, Stephanos & Spyromitros, Eleftherios, 2023. "Does innovation affect the impact of corruption on economic growth? International evidence," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 1030-1054.
    7. Toyo A. M. Dossou & Kihumuro Jotham & Kouessi P. Dossou & Emmanuelle N. Kambaye & Simplice A. Asongu & Alastaire S. Alinsato, 2023. "Do internet and mobile usage affect the Democracy-economic growth nexus in Africa?," Working Papers 23/074, European Xtramile Centre of African Studies (EXCAS).

    More about this item

    Keywords

    Corruption; Growth; Economic freedom; Emerging countries;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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