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Investigating the Corruption-Growth Nexus for the EU-15: Does the Quality of Governance Matter?

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  • Xanthippi Chapsa
  • Constantinos Katrakilidis

Abstract

This article investigates the impacts of corruption on growth conditional to the quality of governance. We apply dynamic panel techniques on a data set for EU-15 over the period 2002–2013. Considering alternatively two indices for corruption and four indices for the quality of governance, we detect a negative impact of corruption on growth. However, this impact varies depending on the quality of governance. Our findings support the “grease the wheels” hypothesis, which postulates that corruption may be beneficial for growth in countries with ineffective institutions. This is particularly the case for the Southern European countries.

Suggested Citation

  • Xanthippi Chapsa & Constantinos Katrakilidis, 2022. "Investigating the Corruption-Growth Nexus for the EU-15: Does the Quality of Governance Matter?," Journal of Economic Issues, Taylor & Francis Journals, vol. 56(3), pages 838-868, July.
    • Handle: RePEc:mes:jeciss:v:56:y:2022:i:3:p:838-868
    DOI: 10.1080/00213624.2022.2093579
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