IDEAS home Printed from https://ideas.repec.org/a/eee/ecofin/v35y2016icp247-256.html
   My bibliography  Save this article

Is corruption bad for economic growth? Evidence from Asia-Pacific countries

Author

Listed:
  • Huang, Chiung-Ju

Abstract

This study utilizes the bootstrap panel Granger causality approach, which incorporates both cross-sectional dependence and heterogeneity across countries, to investigate whether corruption negatively impacts economic growth in thirteen Asia-Pacific countries over the 1997–2013 period. The empirical results show that there is a significantly positive causality running from corruption to economic growth in South Korea, a significantly positive causality running from economic growth to corruption in China and no significant causality between corruption and economic growth for the remaining countries. According to the empirical results, we do not support the common perception that corruption is bad for economic growth for all thirteen Asia-Pacific. On the contrary, results of this study suggest that the “grease the wheels” hypothesis is supported for South Korea. Additionally, results of this study indicate that for most Asia-Pacific countries, policy makers’ use of anti-corruption policies to promote a country's economic development may not be effective. Finally, results of this study also suggest that for China, increase in economic growth leads to an increase in corruption.

Suggested Citation

  • Huang, Chiung-Ju, 2016. "Is corruption bad for economic growth? Evidence from Asia-Pacific countries," The North American Journal of Economics and Finance, Elsevier, vol. 35(C), pages 247-256.
    • Handle: RePEc:eee:ecofin:v:35:y:2016:i:c:p:247-256
    DOI: 10.1016/j.najef.2015.10.013
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S106294081500100X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.najef.2015.10.013?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nelson C. Mark & Masao Ogaki & Donggyu Sul, 2005. "Dynamic Seemingly Unrelated Cointegrating Regressions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(3), pages 797-820.
    2. Giorgio d’Agostino & John Paul Dunne & Luca Pieroni, 2012. "Corruption, Military Spending And Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 23(6), pages 591-604, December.
    3. Swamy, P A V B, 1970. "Efficient Inference in a Random Coefficient Regression Model," Econometrica, Econometric Society, vol. 38(2), pages 311-323, March.
    4. Acemoglu, Daron & Verdier, Thierry, 1998. "Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach," Economic Journal, Royal Economic Society, vol. 108(450), pages 1381-1403, September.
    5. Kwabena Gyimah-Brempong, 2002. "Corruption, economic growth, and income inequality in Africa," Economics of Governance, Springer, vol. 3(3), pages 183-209, November.
    6. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
    7. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 239-253.
    8. M. Hashem Pesaran & Aman Ullah & Takashi Yamagata, 2008. "A bias-adjusted LM test of error cross-section independence," Econometrics Journal, Royal Economic Society, vol. 11(1), pages 105-127, March.
    9. Olubanjo Taiwo Ajilore & D.O. Elumilade, 2007. "Does Corruption Matter For Nigeria Long Run Growth: Evidence From Cointegration Analyses And Causality Tests?," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 1(2), pages 69-79.
    10. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    11. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    12. Glaeser, Edward L. & Saks, Raven E., 2006. "Corruption in America," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1053-1072, August.
    13. Hakeem Ishola Mobolaji & Kamil Omoteso, 2009. "Corruption and economic growth in some selected transitional economies," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 5(1), pages 70-82, March.
    14. Christophe Hurlin, 2004. "Testing Granger causality in Heterogeneous panel data models with fixed coefficients," Post-Print halshs-00257395, HAL.
    15. Dridi, Mohamed, 2013. "Corruption and Economic Growth: The Transmission Channels," MPRA Paper 47873, University Library of Munich, Germany.
    16. Kwabena Gyimah-Brempong & Samaria de Gyimah-Brempong, 2006. "Corruption, Growth, and Income Distribution: Are there Regional Differences?," Economics of Governance, Springer, vol. 7(3), pages 245-269, August.
    17. Dzhumashev, Ratbek, 2014. "Corruption and growth: The role of governance, public spending, and economic development," Economic Modelling, Elsevier, vol. 37(C), pages 202-215.
    18. Enrico Colombatto, 2003. "Why is Corruption Tolerated?," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 16(4), pages 363-379, December.
    19. Eatzaz Ahmad & Muhammad Aman Ullah & Muhammad Irfanullah Arfeen, 2012. "Does Corruption Affect Economic Growth?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 49(2), pages 277-305, November.
    20. Noel Johnson & Courtney LaFountain & Steven Yamarik, 2011. "Corruption is bad for growth (even in the United States)," Public Choice, Springer, vol. 147(3), pages 377-393, June.
    21. Mr. Carlos A Leite & Jens Weidmann, 1999. "Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth," IMF Working Papers 1999/085, International Monetary Fund.
    22. Ms. Hélène Poirson, 1998. "Economic Security, Private Investment, and Growth in Developing Countries," IMF Working Papers 1998/004, International Monetary Fund.
    23. Mo, Pak Hung, 2001. "Corruption and Economic Growth," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 66-79, March.
    24. Biru Paksha Paul, 2010. "Does corruption foster growth in Bangladesh?," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 9(3), pages 246-262, September.
    25. Del Monte, Alfredo & Papagni, Erasmo, 2001. "Public expenditure, corruption, and economic growth: the case of Italy," European Journal of Political Economy, Elsevier, vol. 17(1), pages 1-16, March.
    26. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
    27. Mushfiq Swaleheen, 2011. "Economic growth with endogenous corruption: an empirical study," Public Choice, Springer, vol. 146(1), pages 23-41, January.
    28. Lui, Francis T, 1985. "An Equilibrium Queuing Model of Bribery," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 760-781, August.
    29. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 681-712.
    30. Mr. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Working Papers 1998/063, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Saidi, Hichem & El Montasser, Ghassen & Ajmi, Noomen, 2018. "Renewable Energy, Quality of Institutions and Economic Growth in MENA Countries: a Panel Cointegration Approach," MPRA Paper 84055, University Library of Munich, Germany.
    2. Siphiwo Bitterhout & Beatrice D. Simo-Kengne, 2020. "The effect of corruption on economic growth in the BRICS countries. A panel data analysis," Economic Development and Well-being Research Group Working Paper Series edwrg-03-2020, University of Johannesburg, College of Business and Economics, revised 2020.
    3. E. Tsanana & X. Chapsa & C. Katrakilidis, 2016. "Is growth corrupted or bureaucratic? Panel evidence from the enlarged EU," Applied Economics, Taylor & Francis Journals, vol. 48(33), pages 3131-3147, July.
    4. Ghulam Shabbir & Mumtaz Anwar & Shahid Adil, 2016. "Corruption, Political Stability and Economic Growth," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 689-702.
    5. Jac C Heckelman & Benjamin Powell, 2010. "Corruption and the Institutional Environment for Growth," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 52(3), pages 351-378, September.
    6. Eugen Dimant & Guglielmo Tosato, 2018. "Causes And Effects Of Corruption: What Has Past Decade'S Empirical Research Taught Us? A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 335-356, April.
    7. Ali Acaravci & Seyfettin Artan & Pinar Hayaloglu & Sinan Erdogan, 2023. "Economic and Institutional Determinants of Corruption: The Case of Developed and Developing Countries," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 47(1), pages 207-231, March.
    8. Andrew Hodge & Sriram Shankar & D. S. Prasada Rao & Alan Duhs, 2011. "Exploring the Links Between Corruption and Growth," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 474-490, August.
    9. Krisztina Kis-Katos & Günther G. Schulze, 2013. "Corruption in Southeast Asia: a survey of recent research," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 27(1), pages 79-109, May.
    10. Toke S. Aidt, 2009. "Corruption, institutions, and economic development," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 25(2), pages 271-291, Summer.
    11. Erum, Naila & Hussain, Shahzad, 2019. "Corruption, natural resources and economic growth: Evidence from OIC countries," Resources Policy, Elsevier, vol. 63(C), pages 1-1.
    12. Hbib Sekrafi & Asma Sghaier, 2018. "Examining the Relationship Between Corruption, Economic Growth, Environmental Degradation, and Energy Consumption: a Panel Analysis in MENA Region," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(3), pages 963-979, September.
    13. Bienvenido Ortega & Antonio Casquero & Jesús Sanjuán, 2016. "Corruption and Convergence in Human Development: Evidence from 69 Countries During 1990–2012," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(2), pages 691-719, June.
    14. Dwiputri, Inayati Nuraini & Arsyad, Lincolin & Pradiptyo, Rimawan, 2018. "The corruption-income inequality trap: A study of Asian countries," Economics Discussion Papers 2018-81, Kiel Institute for the World Economy (IfW Kiel).
    15. repec:pdn:wpaper:79 is not listed on IDEAS
    16. Shrabani Saha & Girijasankar Mallik & Dimitrios Vortelinos, 2017. "Does Corruption Facilitate Growth? A Cross-national Study in a Non-linear Framework," South Asian Journal of Macroeconomics and Public Finance, , vol. 6(2), pages 178-193, December.
    17. Keith Blackburn & Yuanyuan Wang, 2009. "Uncertainty, Entrepreneurship and the Organisation of Corruption," Centre for Growth and Business Cycle Research Discussion Paper Series 133, Economics, The University of Manchester.
    18. Alice N. Sindzingre & Christian Milelli, 2010. "The Uncertain Relationship between Corruption and Growth in Developing Countries: Threshold Effects and State Effectiveness," EconomiX Working Papers 2010-10, University of Paris Nanterre, EconomiX.
    19. Ren, Yi-Shuai & Ma, Chao-Qun & Apergis, Nicholas & Sharp, Basil, 2021. "Responses of carbon emissions to corruption across Chinese provinces," Energy Economics, Elsevier, vol. 98(C).
    20. Humna Ahsan & Keith Blackburn, 2015. "Human capital and income distribution in a model of corruption," Centre for Growth and Business Cycle Research Discussion Paper Series 208, Economics, The University of Manchester.
    21. Zi Wen Vivien Wong & Fanyu Chen & Siong Hook Law & Normaz Wana Ismail, 2022. "The Effects Of Rent Seeking Activities On Economic Growth In Middle-Income Countries," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(2), pages 215-234, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecofin:v:35:y:2016:i:c:p:247-256. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620163 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.