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Government spending, corruption and economic growth

Author Info

Listed author(s):
  • d'Agostino, Giorgio
  • Dunne, Paul J.
  • Pieroni, Luca

Abstract

This paper considers the effects of corruption and government spending on economic growth. It starts from an endogenous growth model and extends it to account for the detrimental effects of corruption on the potentially productive components of government spending, namely military and investment spending. The resulting model is estimated on a sample of African countries and the results show, first, that the growth rate is strongly influenced by the interaction between corruption and military burden, with the interaction between corruption and government investment expenditure having a weaker effect. Second, allowing for the cyclical economic fluctuations in specific countries leaves the estimated elasticities close to those of the full sample. Third, there are significant conditioning variables that need to be taken into account, namely the form of government, political instability and natural resource endowment. These illustrate the cross country heterogeneity when accounting for quantitative direct and indirect effects of key variables on economic growth. Overall, these findings suggest important policy implications.

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File URL: https://mpra.ub.uni-muenchen.de/38109/1/MPRA_paper_38109.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 38109.

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Date of creation: 15 Apr 2012
Handle: RePEc:pra:mprapa:38109
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Keywords: corruption; military spending; development economics; panel data; Africa;

Other versions of this item:

Find related papers by JEL classification:
  • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
  • H5 - Public Economics - - National Government Expenditures and Related Policies
  • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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Full references (including those not matched with items on IDEAS)

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Gasto gubernamental, corrupción y crecimiento económico
    by in Tiempo Económico on 2012-05-02 16:49:54
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:

  1. Ryan A. Compton & Bryan Paterson, 2016. "Military Spending and Growth: The Role of Institutions," Defence and Peace Economics, Taylor & Francis Journals, vol. 27(3), pages 301-322, June.
  2. Sorin-Daniel, MANOLE & Raluca, Erdniç, 2014. "Assessing The Impact Of Corruption Upon The Romanian Economy," Management Strategies Journal, Constantin Brancoveanu University, vol. 24(2), pages 4-11.
  3. Eunji Kim & Yoonhee Ha & Sangheon Kim, 2017. "Public Debt, Corruption and Sustainable Economic Growth," Sustainability, MDPI, Open Access Journal, vol. 9(3), pages 1-30, March.
  4. d'Agostino, Giorgio & Scarlato, Margherita, 2016. "Institutions, Innovation and Economic Growth in European Countries," MPRA Paper 72427, University Library of Munich, Germany.
  5. d'Agostino, Giorgio & Dunne, John Paul & Pieroni, Luca, 2013. "Military Expenditure, Endogeneity and Economic Growth," MPRA Paper 45640, University Library of Munich, Germany.
  6. Fernando Delbianco & Carlos Dabús & María angeles Caraballo pou, 2016. "Growth, Inequality and Corruption: Evidence from Developing Countries," Economics Bulletin, AccessEcon, vol. 36(3), pages 1811-1820.

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