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Corruption and Economic Growth in Nigeria: 1986 -2007

  • Aliyu, Shehu Usman Rano
  • Elijah, Akanni Oludele

Abstract The World Bank (2000) asserts that corruption is the single greatest impediment to economic growth in third world countries. This study was set out to investigate the impact of corruption on economic growth in Nigeria from 1986 to 2007. A Barro-type endogenous growth model was adopted and reconditioned to suit the purpose of the paper. The Engle-Granger (1987) cointegration and error correction mechanism (ECM) techniques were employed to unit root properties of the variables, their long run relationship and to determine values of long run parameters. The results show that corruption exerts significant direct effect on economic growth and indirectly via some critical variables examined by the paper which include Government Capital Expenditure, Human Capital Development and Total employment. The paper discovers that about 20% of the increase in government capital expenditure ends up in private pockets. It is, therefore, recommended that the government should consolidate on its efforts to fight corruption to a standstill in the country.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 12504.

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Date of creation: 10 Oct 2008
Date of revision: 07 Dec 2008
Handle: RePEc:pra:mprapa:12504
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  1. Acemoglu, D. & Verdier, T., 1996. "Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach," DELTA Working Papers 96-12, DELTA (Ecole normale supérieure).
  2. Lorenzo Pellegrini & Reyer Gerlagh, 2004. "Corruption's Effect on Growth and its Transmission Channels," Kyklos, Wiley Blackwell, vol. 57(3), pages 429-456, 08.
  3. Sergio Rebelo, 1999. "Long Run Policy Analysis and Long Run Growth," Levine's Working Paper Archive 2114, David K. Levine.
  4. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-38, October.
  5. Sanjeev Gupta, 1998. "Does Corruption Affect Income Inequality and Poverty?," IMF Working Papers 98/76, International Monetary Fund.
  6. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  7. Nobuo Akai & Yusaku Horiuchi & Masayo Sakata, 2005. "Short-run and Long-run Effects of Corruption on Economic Growth: Evidence from State-Level Cross-Section Data for the United States," CIRJE F-Series CIRJE-F-348, CIRJE, Faculty of Economics, University of Tokyo.
  8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  9. Ram, Rati, 1986. "Government Size and Economic Growth: A New Framework and Some Evidencefrom Cross-Section and Time-Series Data," American Economic Review, American Economic Association, vol. 76(1), pages 191-203, March.
  10. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
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