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Towards A Doughnut Economy

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  • El-Husseiny, Ghada
  • Yousri, Dina
  • Richter, Christian

Abstract

Social services are often characterized by market failures, justifying government intervention in the provision of these services. It is widely acknowledged that government intervention breeds corruption as resources are being transferred from one party to another. Corruption has the power to hinder development and cripple the march towards the Sustainable Development Goals. This paper empirically examines the impact of institutional failure on public sector services provision, by exploring the impact of corruption on SDG three and four; Good health and wellbeing and Quality education respectively, from various perspectives. We extend the analysis by examining if the impact of corruption on these goals differ when we account for a country’s current corruption state. The paper employs Pooled OLS and Fixed effects panel estimation on 22 corrupt, and 22 clean country between 2000 and 2017. Results show that corruption, in both corrupt and clean countries, has a more severe impact on health than the education sector. In almost all specifications, corruption has an insignificant effect on school enrollment rates, but a significant effect on infant mortality rates. Results further indicate that, on average, a 1 point increase in the CPI can increase health expenditures by 0.116% in corrupt and clean countries. According to the fixed effects model, the way health and education expenditures are determined in clean and corrupt countries are completely country-specific, in which corruption plays a minimal role. The most astounding results-driven is that corrupt countries, on average, have more effective and efficient healthcare expenditures in our sample. While some insights are provided as to why these results prevail, they should be further studied. Overall, corruption impedes development outcomes, and any anti-corrupt policies taken will bring forth immense improvements, and speed up the march towards sustainability.

Suggested Citation

  • El-Husseiny, Ghada & Yousri, Dina & Richter, Christian, 2022. "Towards A Doughnut Economy," Conference papers 333495, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333495
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    References listed on IDEAS

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    3. Mr. Erwin H Tiongson & Mr. Hamid R Davoodi & Mr. Sanjeev Gupta, 2000. "Corruption and the Provision of Health Care and Education Services," IMF Working Papers 2000/116, International Monetary Fund.
    4. Baldacci, Emanuele & Clements, Benedict & Gupta, Sanjeev & Cui, Qiang, 2008. "Social Spending, Human Capital, and Growth in Developing Countries," World Development, Elsevier, vol. 36(8), pages 1317-1341, August.
    5. Mr. David Hauner & Ms. Annette J Kyobe, 2008. "Determinants of Government Efficiency," IMF Working Papers 2008/228, International Monetary Fund.
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