IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/31226.html
   My bibliography  Save this paper

Corruption and economic growth: A meta-analysis of the evidence on low-income countries and beyond

Author

Listed:
  • Ugur, Mehmet
  • Dasgupta, Nandini

Abstract

Corruption is a symptom and outcome of institutional deficiency, with potentially adverse effects on economic growth. This paper aims to provide a synthesis of the existing evidence on the relationship between corruption and economic growth - controlling for effect type, data sources, and country groupings. Using 32 key search terms and 43 low-income country names, we searched in 20 electronic databases and obtained 1,002 studies. Initial screening on the basis of PIOS (Population-Independent Variable-Outcome-Study Design) criteria and critical evaluation on the basis VRA (Validity-Reliability-Applicability) criteria led to inclusion of 115 studies for analysis. We conduct a meta-analysis of the empirical findings in 72 empirical studies, using fixed-effect and random-effect weighted means and testing for significance through precision-effect tests (PETs). Our findings indicate that corruption has a negative effect on per-capita GDP growth overall. We also report that corruption is relatively more detrimental in mixed countries as opposed to low-income countries only and that indirect effects of corruption on growth (through the human capital and public finance channels) are larger than its direct effects.

Suggested Citation

  • Ugur, Mehmet & Dasgupta, Nandini, 2011. "Corruption and economic growth: A meta-analysis of the evidence on low-income countries and beyond," MPRA Paper 31226, University Library of Munich, Germany, revised 31 May 2011.
  • Handle: RePEc:pra:mprapa:31226
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/31226/1/MPRA_paper_31226.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Shimpalee, Pattama L. & Breuer, Janice Boucher, 2006. "Currency crises and institutions," Journal of International Money and Finance, Elsevier, vol. 25(1), pages 125-145, February.
    2. David Croix & Clara Delavallade, 2009. "Growth, public investment and corruption with failing institutions," Economics of Governance, Springer, vol. 10(3), pages 187-219, July.
    3. Kalle Pajunen, 2008. "Institutions and inflows of foreign direct investment: a fuzzy-set analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(4), pages 652-669, June.
    4. Rowley, Charles K., 2000. "Political culture and economic performance in sub-Saharan Africa," European Journal of Political Economy, Elsevier, vol. 16(1), pages 133-158, March.
    5. Toke S. Aidt, 2009. "Corruption, institutions, and economic development," Oxford Review of Economic Policy, Oxford University Press, vol. 25(2), pages 271-291, Summer.
    6. Imam Patrick Amir & Jacobs Davina, 2014. "Effect of Corruption on Tax Revenues in the Middle East," Review of Middle East Economics and Finance, De Gruyter, vol. 10(1), pages 1-24, April.
    7. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    8. Fathi Ali & Norbert Fiess & Ronald MacDonald, 2010. "Do Institutions Matter for Foreign Direct Investment?," Open Economies Review, Springer, vol. 21(2), pages 201-219, April.
    9. Maria Abreu Henri L. F. de Groot & Raymond J. G. M. Florax, 2005. "A Meta-Analysis of β-Convergence: the Legendary 2%," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 389-420, July.
    10. Aidt, Toke & Dutta, Jayasri & Sena, Vania, 2008. "Governance regimes, corruption and growth: Theory and evidence," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 195-220, June.
    11. Egger, Peter & Winner, Hannes, 2005. "Evidence on corruption as an incentive for foreign direct investment," European Journal of Political Economy, Elsevier, vol. 21(4), pages 932-952, December.
    12. Lorenzo Pellegrini & Reyer Gerlagh, 2004. "Corruption's Effect on Growth and its Transmission Channels," Kyklos, Wiley Blackwell, vol. 57(3), pages 429-456, August.
    13. Jasper M. Dalhuisen & Raymond J. G. M. Florax & JHenri L. F. de Groot & Peter Nijkamp, 2003. "Price and Income Elasticities of Residential Water Demand: A Meta-Analysis," Land Economics, University of Wisconsin Press, vol. 79(2), pages 292-308.
    14. Bianca Clausen & Aart Kraay & Zsolt Nyiri, 2011. "Corruption and Confidence in Public Institutions: Evidence from a Global Survey," World Bank Economic Review, World Bank Group, vol. 25(2), pages 212-249.
    15. Magda Kandil, 2009. "Determinants of institutional quality and their impact on economic growth in the MENA region," International Journal of Development Issues, Emerald Group Publishing, vol. 8(2), pages 134-167, October.
    16. Kwabena Gyimah-Brempong, 2002. "Corruption, economic growth, and income inequality in Africa," Economics of Governance, Springer, vol. 3(3), pages 183-209, November.
    17. Jac C Heckelman & Benjamin Powell, 2010. "Corruption and the Institutional Environment for Growth," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 52(3), pages 351-378, September.
    18. Butkiewicz, James L. & Yanikkaya, Halit, 2006. "Institutional quality and economic growth: Maintenance of the rule of law or democratic institutions, or both?," Economic Modelling, Elsevier, vol. 23(4), pages 648-661, July.
    19. Rodrik, Dani, 1999. "Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses," Journal of Economic Growth, Springer, vol. 4(4), pages 385-412, December.
    20. Florax, Raymond J.G.M., 2001. "Methodological pitfalls in meta-analysis: publication bias," Serie Research Memoranda 0028, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    21. Jae-Hyung Lee, 2006. "Business corruption, public sector corruption, and growth rate: time series analysis using Korean data," Applied Economics Letters, Taylor & Francis Journals, vol. 13(13), pages 881-885.
    22. Donaldson, John A., 2008. "Growth is Good for Whom, When, How? Economic Growth and Poverty Reduction in Exceptional Cases," World Development, Elsevier, vol. 36(11), pages 2127-2143, November.
    23. Mushfiq us Swaleheen, 2007. "Corruption and Investment Choices: A Panel Data Study," Kyklos, Wiley Blackwell, vol. 60(4), pages 601-616, November.
    24. Daron Acemoglu & Simon Johnson & James Robinson, 2004. "Institutions as the Fundamental Cause of Long-Run Growth," NBER Working Papers 10481, National Bureau of Economic Research, Inc.
    25. Dani Rodrik, 2000. "Institutions for High-Quality Growth: What They are and How to Acquire Them," NBER Working Papers 7540, National Bureau of Economic Research, Inc.
    26. Paolo Mauro, 2004. "The Persistence of Corruption and Slow Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 51(1), pages 1-1.
    27. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, vol. 84(3), pages 359-368, June.
    28. Mwangi S. Kimenyi, 2007. "Markets, Institutions And Millennium Development Goals," Economic Affairs, Wiley Blackwell, vol. 27(2), pages 14-19, June.
    29. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    30. Elizabeth Asiedu, 2006. "Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability," The World Economy, Wiley Blackwell, vol. 29(1), pages 63-77, January.
    31. Elizabeth Asiedu & James Freeman, 2009. "The Effect of Corruption on Investment Growth: Evidence from Firms in Latin America, Sub-Saharan Africa, and Transition Countries ," Review of Development Economics, Wiley Blackwell, vol. 13(2), pages 200-214, May.
    32. Yelena Kalyuzhnova & Ali M Kutan & Taner Yigit, 2009. "Corruption and Economic Development in Energy-rich Economies," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 51(2), pages 165-180, June.
    33. Laroche, P., 2000. "What do Unions do to Productivity? A Meta-Analysis," Papers 2000-5, Groupe de recherche en économie financière et en gestion des entreprises, Universite Nancy 2.
    34. Asfaw Kumssa & Isaac M. Mbeche, 2004. "The role of institutions in the development process of African countries," International Journal of Social Economics, Emerald Group Publishing, vol. 31(9), pages 840-854, Septembe.
    35. Mina Baliamoune-Lutz, 2009. "Human Well-Being Effects Of Institutions And Social Capital," Contemporary Economic Policy, Western Economic Association International, vol. 27(1), pages 54-66, January.
    36. Isaac Ehrlich & Francis T. Lui, 1999. "Bureaucratic Corruption and Endogenous Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 270-293, December.
    37. Busse, Matthias & Hefeker, Carsten, 2007. "Political risk, institutions and foreign direct investment," European Journal of Political Economy, Elsevier, vol. 23(2), pages 397-415, June.
    38. Mohsin Habib & Leon Zurawicki, 2002. "Corruption and Foreign Direct Investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(2), pages 291-307, June.
    39. Stephen Everhart & Jorge Martinez- Vazquez & Robert McNab, 2009. "Corruption, governance, investment and growth in emerging markets," Applied Economics, Taylor & Francis Journals, vol. 41(13), pages 1579-1594.
    40. Pierre-Guillaume Méon & Khalid Sekkat, 2005. "Does corruption grease or sand the wheels of growth?," Public Choice, Springer, vol. 122(1), pages 69-97, January.
    41. Harvey Goldstein & Min Yang & Rumana Omar & Rebecca Turner & Simon Thompson, 2000. "Meta-analysis using multilevel models with an application to the study of class size effects," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 49(3), pages 399-412.
    42. T. D. Stanley, 2005. "Beyond Publication Bias," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 309-345, July.
    43. Ventelou, Bruno, 2002. "Corruption in a Model of Growth: Political Reputation, Competition and Shocks," Public Choice, Springer, vol. 110(1-2), pages 23-40, January.
    44. Boris Podobnik & Jia Shao & Djuro Njavro & Plamen Ivanov & H. Stanley, 2008. "Influence of corruption on economic growth rate and foreign investment," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 63(4), pages 547-550, June.
    45. Martin Paldam & Erich Gundlach, 2008. "Two Views on Institutions and Development: The Grand Transition vs the Primacy of Institutions," Kyklos, Wiley Blackwell, vol. 61(1), pages 65-100, February.
    46. Abdoul' Ganiou Mijiyawa, 2008. "Sustained Economic Growth: Do Institutions Matter, and Which One Prevails?," Post-Print hal-00363144, HAL.
    47. Augustin Kwasi Fosu, 2009. "Inequality and the Impact of Growth on Poverty: Comparative Evidence for Sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 45(5), pages 726-745.
    48. Augustin Fosu & Robert Bates & Anke Hoeffler, 2006. "Institutions, Governance and Economic Development in Africa: An Overview," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(1), pages 1-9, April.
    49. Dzhumashev, Ratbek, 2009. "Is there a direct effect of corruption on growth?," MPRA Paper 18489, University Library of Munich, Germany.
    50. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    51. John M. Luiz, 2009. "Institutions and economic performance: Implications for African development," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(1), pages 58-75.
    52. Edinaldo Tebaldi & Bruce Elmslie, 2008. "Institutions, Innovation And Economic Growth," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 33(2), pages 27-53, December.
    53. William Easterly & Jozef Ritzen & Michael Woolcock, 2006. "Social Cohesion, Institutions, And Growth," Economics and Politics, Wiley Blackwell, vol. 18(2), pages 103-120, July.
    54. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1993. "Why Is Rent-Seeking So Costly to Growth?," American Economic Review, American Economic Association, vol. 83(2), pages 409-414, May.
    55. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2007. "The worldwide governance indicators project : answering the critics," Policy Research Working Paper Series 4149, The World Bank.
    56. Rahman, Aminur & Kisunko, Gregory & Kapoor, Kapil, 2000. "Estimating the effects of corruption - implications for Bangladesh," Policy Research Working Paper Series 2479, The World Bank.
    57. Abdoul' Ganiou Mijiyawa, 1982. "Sustained Economic Growth: Do Institutions Matter, and Which One Prevails?," Cato Journal, Cato Journal, Cato Institute, vol. 2(3), pages 385-420, Winter.
    58. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    59. Keith Blackburn & Kyriakos C. Neanidis & M. Emranul Haque, 2008. "Corruption, Seigniorage and Growth: Theory and Evidence," CESifo Working Paper Series 2354, CESifo Group Munich.
    60. Sanjeev Gupta & Hamid Davoodi & Rosa Alonso-Terme, 2002. "Does corruption affect income inequality and poverty?," Economics of Governance, Springer, vol. 3(1), pages 23-45, March.
    61. Edgardo Campos, J. & Lien, Donald & Pradhan, Sanjay, 1999. "The Impact of Corruption on Investment: Predictability Matters," World Development, Elsevier, vol. 27(6), pages 1059-1067, June.
    62. Katsushi Imai & Raghav Gaiha & Ganesh Thapa, 2010. "Is the Millennium Development Goal on Poverty Still Achievable? The Role of Institutions, Finance and Openness," Oxford Development Studies, Taylor & Francis Journals, vol. 38(3), pages 309-337.
    63. Aidt, T. & Dutta, J. & Vania Sena, 2005. "Growth, Governance and Corruption in the Presence of Threshold Effects: Theory and Evidence," Cambridge Working Papers in Economics 0540, Faculty of Economics, University of Cambridge.
    64. Hillman, Arye L., 2004. "Corruption and public finance: an IMF perspective," European Journal of Political Economy, Elsevier, vol. 20(4), pages 1067-1077, November.
    65. T. D. Stanley, 2001. "Wheat from Chaff: Meta-analysis as Quantitative Literature Review," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 131-150, Summer.
    66. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
    67. Anil Mishra & Kevin Daly, 2007. "Effect of quality of institutions on outward foreign direct investment," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 16(2), pages 231-244.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Simplice Asongu & Oasis Kodila-Tedika, 2016. "Fighting African conflicts and crimes: which governance tools matter?," International Journal of Social Economics, Emerald Group Publishing, vol. 43(5), pages 466-485, May.
    2. Micheline Goedhuys & Pierre Mohnen & Tamer Taha, 2016. "Corruption, innovation and firm growth: firm-level evidence from Egypt and Tunisia," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(3), pages 299-322, December.
    3. Asongu, Simplice A. & Kodila-Tedika, Oasis, 2013. "Crime and conflicts in Africa: consequences of corruption?," European Economic Letters, European Economics Letters Group, vol. 2(2), pages 50-55.
    4. Adefeso, Hammed, 2018. "Corruption, Political Instability and Development Nexus in Africa: A Call for Sequential Policies Reforms," MPRA Paper 85277, University Library of Munich, Germany.
    5. Kuloglu, Ayhan & Lobont, Oana-Ramona & Topcu, Mert, 2012. "A question of causality between political corruption, economic freedom and economic growth in Europe," MPRA Paper 40365, University Library of Munich, Germany.
    6. repec:jfr:jms111:v:8:y:2017:i:5:p:71-85 is not listed on IDEAS
    7. Simplice A Asongu, 2015. "A Good Turn Deserves Another: Political Stability, Corruption and Corruption-Control," Economics Bulletin, AccessEcon, vol. 35(4), pages 2037-2048.
    8. Bienvenido Ortega & Antonio Casquero & Jesús Sanjuán, 2016. "Corruption and Convergence in Human Development: Evidence from 69 Countries During 1990–2012," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(2), pages 691-719, June.
    9. Ambar, Rabnawaz, 2015. "Corruption, Inequality and Economic Growth," MPRA Paper 70375, University Library of Munich, Germany, revised 2015.
    10. Kodila Tedika, Oasis, 2012. "Consequences De La Corruption : Panorama Empirique
      [Consequences of Corruption : Empirical survey]
      ," MPRA Paper 41482, University Library of Munich, Germany.
    11. Raphael Espinoza, 2012. "Factor Accumulation and the Determinants of TFP in the GCC," OxCarre Working Papers 094, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.

    More about this item

    Keywords

    Corruption; institutions; governance; economic growth; meta-analysis; systematic reviews;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:31226. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.