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Corruption and saving in a panel of countries

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  • us Swaleheen, Mushfiq
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    Abstract

    Saving depends on the incentives to save and the ability to save. The literature provides evidence that many of the key determinants of saving are correlated with the incidence of corruption. There are also a priori reasons to expect a direct relationship between corruption and saving. Our paper extends the literature on corruption and capital flight to the empirical analysis of cross-country differences in the rate of saving. We present evidence that corruption adversely affects the gross national saving rate by encouraging capital flight. Our results also indicate that the level of income, the growth rate of real per capita income and the tax-GDP ratio are the important channels via which the effects of corruption on saving are transmitted.

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    File URL: http://www.sciencedirect.com/science/article/B6X4M-4NWKCKM-1/2/28f92d5184a47ae6a9a698b3aef79025
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Macroeconomics.

    Volume (Year): 30 (2008)
    Issue (Month): 3 (September)
    Pages: 1285-1301

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    Handle: RePEc:eee:jmacro:v:30:y:2008:i:3:p:1285-1301

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    Web page: http://www.elsevier.com/locate/inca/622617

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    References

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    1. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
    2. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
    3. You, Jong-Sung & Khagram, Sanjeev, 2004. "Inequality and Corruption," Working Paper Series rwp04-001, Harvard University, John F. Kennedy School of Government.
    4. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
    5. Masson, Paul R & Bayoumi, Tamim & Samiei, Hossein, 1998. "International Evidence on the Determinants of Private Saving," World Bank Economic Review, World Bank Group, vol. 12(3), pages 483-501, September.
    6. Isaac Ehrlich & Francis T. Lui, 1999. "Bureaucratic Corruption and Endogenous Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S270-S293, December.
    7. Norman Loayza & Klaus Schmidt-Hebbel & Luis Servén, 2000. "What Drives Private Saving Across the World?," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 165-181, May.
    8. Jain, Arvind K., 1988. "An agency theoretic explanation of capital flight," Economics Letters, Elsevier, vol. 28(1), pages 41-45.
    9. Hongyi Li & Lixin Colin Xu & Heng-fu Zou, 2000. "Corruption, Income Distribution, and Growth," Economics and Politics, Wiley Blackwell, vol. 12(2), pages 155-182, 07.
    10. Edwards, Sebastian, 1996. "Why are Latin America's savings rates so low? An international comparative analysis," Journal of Development Economics, Elsevier, vol. 51(1), pages 5-44, October.
    11. Hunt, Jennifer, 2004. "Trust and Bribery: The Role of the Quid Pro Quo and the Link with Crime," IZA Discussion Papers 1179, Institute for the Study of Labor (IZA).
    12. Pual Pecorino, 1992. "Rent Seeking and Growth: The Case of Growth through Human Capital Accumulation," Canadian Journal of Economics, Canadian Economics Association, vol. 25(4), pages 944-56, November.
    13. Khaled Hussein & A. P. Thirlwall, 1999. "Explaining differences in the domestic savings ratio across countries: A panel data study," Journal of Development Studies, Taylor & Francis Journals, vol. 36(1), pages 31-52.
    14. Rose-Ackerman,Susan, 1999. "Corruption and Government," Cambridge Books, Cambridge University Press, number 9780521632935, October.
    15. Rose-Ackerman,Susan, 1999. "Corruption and Government," Cambridge Books, Cambridge University Press, number 9780521659123, October.
    16. Pastor, Manuel Jr., 1990. "Capital flight from Latin America," World Development, Elsevier, vol. 18(1), pages 1-18, January.
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    Cited by:
    1. Andreas Freytag & Sebastian Voll, 2013. "Institutions and savings in developing and emerging economies," Public Choice, Springer, vol. 157(3), pages 475-509, December.

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