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A Comparative Study of Corruption's Effect Channels on Economic Growth in Rentier and Non Rentier Economies

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  • Sepehrdoust, Hamid

    () (Associate Professor, Department of Economics, Faculty of Economics & Social Science, Bu-Ali-Sina University)

  • Fotros , Mohammad Hassan

    () (Professor of Economics, Bu-Ali-Sina University)

  • Berjisian, Adel

    () (Ph.D. Student in Economics, Bu-Ali-Sina University)

Abstract

A number of Significant empirical studies have been conducted to determine the relationship between corruption and economic growth, but these studies focused on the direct effects of corruption on economic growth and even more limited studies have been done on the impact of corruption on economic growth transition channels witch most of them just studied a specified channel. The main objective of present study was to evaluate the transition channels of corruption effect on economic growth simultaneously, in rentier and non-rentier economies and determine how their interactions on the other. To do this we used data of International Corruption Risk Guide (ICRG) index and Kaufman et al. (2000) corruption index (Graft) for 53 selected countries over the period 1996-2013 in this study. Also simultaneous equations 3SLS estimation method is used. The results indicate that, both types of corruption index has a negative impact on economic growth of the studied countries and impact transition through the channels of investment, government spending, political instability and economic openness are significant through both corruption index. Also, comparisons between rentier countries and non-rentier countries, shows that the effect of corruption on economic growth using two different corruption index is different, with both indices, the effects of corruption in rentier countries is bigger than non-rentier countries.

Suggested Citation

  • Sepehrdoust, Hamid & Fotros , Mohammad Hassan & Berjisian, Adel, 2016. "A Comparative Study of Corruption's Effect Channels on Economic Growth in Rentier and Non Rentier Economies," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 3(1), pages 59-88, June.
  • Handle: RePEc:ris:qjatoe:0034
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    More about this item

    Keywords

    Corruption; Economic growth; Transition channels of corruption; Simultaneous equations system;

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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