IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2019-04-5.html
   My bibliography  Save this article

Exploring the Linkage between Corruption and Economic Development in The Case of Selected Developing and Developed Nations

Author

Listed:
  • Marc Audi

    (Faculty of Business Administration, AOU University Faculty of Business Administration/University Paris 1 Pantheon Sorbonne, France)

  • Amjad Ali

    (Lahore School of Accountancy and Finance, University of Lahore City Campus, Pakistan.)

Abstract

Corruption is like an epidemic that has the power to destroy a country’s socioeconomic, financial, human and political environment. It has severe consequences in developing countries. This study has examined the impact of existing human, political, financial and economic factors on corruption for a set of panel countries. The data from 1995 to 2004 is used to serve this purpose. For examining the stationarity of the variables, Levin- Lin-Chu (2002), Fisher-ADF and Fisher-PP tests are applied. Pedroni Residual based Co-integration and FMOLS by Phillips and Hansen (1990) test has been used for examining the co-integration among the variables of the model. The speed of adjustment and short-run relationship has been tested through VECM. The estimated results show that exports, GDP per capita and political stability have a negative impact on corruption, whereas imports, financial development, human development index, bureaucracy, democracy and the rule of law have a positive relationship with corruption. The simplified procedures of import and export will help reduce the practice of bribes and corruption. The governments should take steps not only to increase the income, but also to improve the people’s standard of living. There should be improvements in the political system. Democracy is also helpful to get rid of corruption.

Suggested Citation

  • Marc Audi & Amjad Ali, 2019. "Exploring the Linkage between Corruption and Economic Development in The Case of Selected Developing and Developed Nations," International Journal of Economics and Financial Issues, Econjournals, vol. 9(4), pages 37-49.
  • Handle: RePEc:eco:journ1:2019-04-5
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijefi/article/download/8052/pdf
    Download Restriction: no

    File URL: https://www.econjournals.com/index.php/ijefi/article/view/8052/pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:hrv:faseco:33077889 is not listed on IDEAS
    2. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    4. Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April.
    5. Federico Bonaglia & Jorge Braga de Macedo & Maurizio Bussolo, 2009. "How Globalisation Improves Governance," Chapters, in: Linda Yueh (ed.), The Law and Economics of Globalisation, chapter 7, Edward Elgar Publishing.
    6. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 99-125.
    7. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
    8. Mo, Pak Hung, 2001. "Corruption and Economic Growth," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 66-79, March.
    9. M. Shahid Alam, 1989. "Anatomy of Corruption: An Approach to the Political Economy of Underdevelopment," American Journal of Economics and Sociology, Wiley Blackwell, vol. 48(4), pages 441-456, October.
    10. Tanzi, Vito, 2002. "Globalization and the Future of Social Protection," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(1), pages 116-127, February.
    11. Pedroni, Peter, 2004. "Panel Cointegration: Asymptotic And Finite Sample Properties Of Pooled Time Series Tests With An Application To The Ppp Hypothesis," Econometric Theory, Cambridge University Press, vol. 20(3), pages 597-625, June.
    12. Naci Mocan, 2008. "What Determines Corruption? International Evidence From Microdata," Economic Inquiry, Western Economic Association International, vol. 46(4), pages 493-510, October.
    13. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
    14. repec:hhs:bofitp:2009_005 is not listed on IDEAS
    15. Goel, Rajeev K. & Korhonen, Iikka, 2011. "Exports and cross-national corruption: A disaggregated examination," Economic Systems, Elsevier, vol. 35(1), pages 109-124, March.
    16. Uslaner, Eric M., 2006. "Corruption and Inequality," WIDER Working Paper Series 034, World Institute for Development Economic Research (UNU-WIDER).
    17. Albert de Vaal & Wouter Ebben, 2011. "Institutions and the Relation between Corruption and Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 15(1), pages 108-123, February.
    18. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
    19. Sandholtz, Wayne & Gray, Mark M., 2003. "International Integration and National Corruption," International Organization, Cambridge University Press, vol. 57(4), pages 761-800, October.
    20. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
    21. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    22. Goel, Rajeev K & Nelson, Michael A, 1998. "Corruption and Government Size: A Disaggregated Analysis," Public Choice, Springer, vol. 97(1-2), pages 107-120, October.
    23. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-652, Special I.
    24. Francis T. Lui, 1996. "Three Aspects Of Corruption," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 26-29, July.
    25. Alberto Alesina & George-Marios Angeletos, 2002. "Fairness and Redistribution: US versus Europe," Harvard Institute of Economic Research Working Papers 1983, Harvard - Institute of Economic Research.
    26. Nicholas Apergis & Oguzhan Dincer & James Payne, 2010. "The relationship between corruption and income inequality in U.S. states: evidence from a panel cointegration and error correction model," Public Choice, Springer, vol. 145(1), pages 125-135, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Corruption; Economic Development; Financial Development; Human Development; Political Development; Ethics;

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    Statistics

    Access and download statistics

    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:eco:journ1:2019-04-5. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ilhan Ozturk). General contact details of provider: http://www.econjournals.com .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.