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Does corruption really matter for the structure of public expenditures?

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  • Mondjeli, Itchoko Motande Mwa Ndjokou
  • Ambassa, Martin

Abstract

Corruption significantly distorts the allocation of public expenditures, yet systematic evidence on its effects on current and capital expenditures is limited. This study analyzes panel data from 45 Sub-Saharan African (SSA) countries from 1996 to 2022. Using fixed effects and instrumental variables models, we find that corruption reduces capital expenditures while increasing current expenditures. Additionally, mediation analysis reveals that income inequality, conflict, and the rule of law are key channels through which corruption impacts public expenditure structures in SSA. We recommend enhancing accountability and transparency in public expenditures and prioritizing good governance.

Suggested Citation

  • Mondjeli, Itchoko Motande Mwa Ndjokou & Ambassa, Martin, 2025. "Does corruption really matter for the structure of public expenditures?," Structural Change and Economic Dynamics, Elsevier, vol. 73(C), pages 181-195.
    • Handle: RePEc:eee:streco:v:73:y:2025:i:c:p:181-195
    DOI: 10.1016/j.strueco.2024.12.019
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    More about this item

    Keywords

    Capital expenditures; Corruption; Current expenditures; Transmission channels; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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