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The Impact of Corruption on Economic Development of Bangladesh:Evidence on the Basis of an Extended Solow Model

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  • Pulok, Mohammad Habibullah

Abstract

The purpose of this thesis is to examine the long run relationship between economic growth and corruption in Bangladesh over the period 1984-2008. In this study, I have extended the neoclassical model of economic growth by Solow (1956) including human capital and public sector explicitly at first. Then, I have incorporated corruption into the augmented model using a specific functional form for total factor productivity and three other channels to show impact of corruption on real GDP per capita. To investigate empirically the existence of a long run relationship or co-integration between corruption and real GDP per capita, I have used Auto-Regressive Distributed Lag (ARDL) Bounds Test method. The results of co-integration test confirms that there is a long run relation among corruption, GDP per capita and other determinants of GDP over the study period. The long run estimates indicate that corruption has direct negative impact on per capita GDP i.e. economic development of Bangladesh.

Suggested Citation

  • Pulok, Mohammad Habibullah, 2010. "The Impact of Corruption on Economic Development of Bangladesh:Evidence on the Basis of an Extended Solow Model," MPRA Paper 28755, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:28755
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    References listed on IDEAS

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    6. Axel Dreher & Thomas Herzfeld, 2005. "The Economic Costs of Corruption: A Survey and New Evidence," Public Economics 0506001, EconWPA.
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    Cited by:

    1. Ambar, Rabnawaz, 2015. "Corruption, Inequality and Economic Growth," MPRA Paper 70375, University Library of Munich, Germany, revised 2015.

    More about this item

    Keywords

    ARDL Bounds test; Co-Integration; Corruption; Economic Growth; Neoclassical Model;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • A23 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Graduate
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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