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Corruption and Growth: Evidence from the Italian Regions

Author

Listed:
  • Nadia Fiorino

    (University of L’Aquila)

  • Emma Galli

    (‘La Sapienza’ University of Rome)

  • Ilaria Petrarca

    (University of Verona)

Abstract

This paper investigates the impact of corruption on economic growth in the Italian Regions. We estimate a dynamic growth model for the period 1980-2004 addressing both the potential bias of the measures of corruption and the endogeneity between corruption and economic development. We find strong evidence of a negative correlation between corruption and growth. Moreover, since government intervention has been traditionally used to reduce income differentials between the Northern and the Southern regions, we also analyze the interaction between corruption and government expenditure. Our results indicate that corruption undermines the positive impact that public expenditures have on economic growth.

Suggested Citation

  • Nadia Fiorino & Emma Galli & Ilaria Petrarca, 2012. "Corruption and Growth: Evidence from the Italian Regions," European Journal of Government and Economics, Europa Grande, vol. 1(2), pages 126-144, December.
  • Handle: RePEc:egr:ejge00:v:1:i:2:p:126-144
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    Cited by:

    1. Aghion, Philippe & Akcigit, Ufuk & Cagé, Julia & Kerr, William R., 2016. "Taxation, corruption, and growth," European Economic Review, Elsevier, vol. 86(C), pages 24-51.
    2. Fabio Padovano, 2014. "Distribution of transfers and soft budget spending behaviors: evidence from Italian regions," Public Choice, Springer, vol. 161(1), pages 11-29, October.
    3. Raul Caruso & Adelaide Baronchelli, 2013. "Economic aspects of the complementarity between corruption and crime: evidence from Italy in the period 1996-2005," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 6(2/3), pages 244-260.
    4. Anastasiya Penska, 2015. "Determinants of Corruption in Ukrainian Regions: Spatial Analysis," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 42.
    5. Mahsa Akbari & Duman Bahrami-Rad & Erik O. Kimbrough, 2017. "Kinship, Fractionalization and Corruption," Discussion Papers dp17-17, Department of Economics, Simon Fraser University.
    6. Diego Varela & Giacomo Benedetto & Jose Manuel Sanchez-Santos, 2014. "Editorial statement: Lessons from Goodhart’s law for the management of the journal," European Journal of Government and Economics, Europa Grande, vol. 3(2), pages 100-103, December.
    7. Nedra Baklouti & Younes Boujelbene, 2015. "Exploring the Relationship between Democracy, Corruption and Economic Growth in MENA countries," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 11(3), pages 43-58, June.
    8. Levoshko, Tamila, 2016. "Wie beeinflussen die politische Lage und FDI das Wirtschaftswachstum? Empirische Evidenz für die Ukraine und Polen," Working Papers 0615, University of Heidelberg, Department of Economics.
    9. Matteo Bugamelli & Francesca Lotti & Monica Amici & Emanuela Ciapanna & Fabrizio Colonna & Francesco D’Amuri & Silvia Giacomelli & Andrea Linarello & Francesco Manaresi & Giuliana Palumbo & Filippo Sc, 2018. "Productivity growth in Italy: a tale of a slow-motion change," Questioni di Economia e Finanza (Occasional Papers) 422, Bank of Italy, Economic Research and International Relations Area.
    10. Massimo Finocchiaro Castro & Calogero Guccio & Ilde Rizzo, 2014. "An assessment of the waste effects of corruption on infrastructure provision," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(4), pages 813-843, August.
    11. Diego Varela & Giacomo Benedetto & Jose Manuel Sanchez-Santos, 2013. "Editorial statement: The first two years of EJGE," European Journal of Government and Economics, Europa Grande, vol. 2(2), pages 95-99, December.
    12. Giacomo Di Foggia & Ugo Arrigo, 2015. "The scope of public organisations with productive functions: insights from the inefficiency of Italian local public transport," European Journal of Government and Economics, Europa Grande, vol. 4(2), pages 134-154, December.
    13. Ilaria Petrarca & Roberto Ricciuti, 2013. "The Historical Roots of Corruption and Economic Development in Italy," CESifo Working Paper Series 4212, CESifo Group Munich.
    14. Ambar, Rabnawaz, 2015. "Corruption, Inequality and Economic Growth," MPRA Paper 70375, University Library of Munich, Germany, revised 2015.
    15. Tommaso Giommoni, 2017. "Exposition to Corruption and Political Participation: Evidence from Italian Municipalities," CESifo Working Paper Series 6645, CESifo Group Munich.

    More about this item

    Keywords

    corruption; associative crimes; economic growth; dynamic estimation;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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