Government Regulations of Business, Corruption, Reforms, and the Economic Growth of Nations
AbstractThe present study examines the following claims: (1) nations with more versus less rules nurture growth in corruption, (2) nations with lighter versus heavier rules exhibit lower levels of corruption, (3) lighter versus heavier rules relates to larger formal economies. Using data from the Doing Business annual reports, Transparency International (TI), and national GDP per capita data, the study examines lagged relationships of the three claims. The first claim is bunk: no significant negative relationship occurs for the levels of rules for nations and the growth of corruption. The evidence supports the second claim: nations with the lightest regulations of business exhibit lower levels of corruption, though both the levels of regulation and corruption may be outcomes of GDP growth rather than changes in regulation influencing changes in corruption. The evidence supports the third claim: nations with lighter versus heavier rules have larger formal economies, but economic growth may be the cause of lighter rules rather than the reverse or both the weight of rules and the size of economies may co-vary due to configurations of other conditions. The study presents evidence that growing corruption versus little change in corruptions relates to increases in GDP for nations low in competitiveness. The key conclusion is that The Economist's claim "Bad rules breed corruption. Cutting them costs nothing" is inaccurate and misleading. Additional research is necessary that identifies bad rules and their impact; cutting government rules of business can be extremely costly sometimes, as the Financial Crisis Inquiry Commission Report of the 2008-2009 financial meltdown indicates.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.
Volume (Year): 11 (2012)
Issue (Month): 2 (December)
GDP; government regulation; reform;
Find related papers by JEL classification:
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- International Finance Corporation & World Bank, 2012. "Doing Business 2012 : Doing Business in a More Transparent World," World Bank Publications, The World Bank, number 5907, October.
- Barassi, Marco R. & Zhou, Ying, 2012. "The effect of corruption on FDI: A parametric and non-parametric analysis," European Journal of Political Economy, Elsevier, vol. 28(3), pages 302-312.
- Matthew Cole & Robert Elliott & Jing Zhang, 2009.
"Corruption, Governance and FDI Location in China: A Province-Level Analysis,"
Journal of Development Studies,
Taylor & Francis Journals, vol. 45(9), pages 1494-1512.
- Matthew A Cole & Robert J R Elliott & Jing Zhang, 2009. "Corruption, Governance and FDI Location in China: A Province-Level Analysis," Discussion Papers 09-14, Department of Economics, University of Birmingham.
- Matthew Cole & Robert Elliott & Jing Zhang, 2008. "Corruption, Governance and FDI Location in China : A Province-Level Analysis," Discussion Papers 08-06, Department of Economics, University of Birmingham.
- Soyer, Emre & Hogarth, Robin M., 2012. "The illusion of predictability: How regression statistics mislead experts," International Journal of Forecasting, Elsevier, vol. 28(3), pages 695-711.
- Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
- Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Yi-Ju Su).
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.