This study examines the relationship between corruption and economic growth in Tunisia from 1992 to 2018 by focusing on the role of the discretionary power and the distortion of the public spending. To explore the relationship between the variables of interest, the ARDL Bound testing co-integration approach of Pesaran and Shin (1999) was used. The empirical results showed that corruption negatively affects the long-term economic performance by suggesting that large-scale public investment is not necessarily desirable in an environment characterized by corruption as this leads to the waste of public funds. However, the estimation of an ECM model of short-term dynamics shows that corruption is associated with the increase of the real GDP per capita. Therefore, these results support the idea that corruption undermines long-term economic performance and call for institutional reforms to improve the quality of governance as a pre-condition for any broad-based economic growth.
In the post 2011 revolutionary period, Tunisia was engaged in a strategy of development despite the significant difficulties caused by economic growth and chronic corruption. In fact, an increased effectiveness of the said strategy thus calls for a better understanding of this impediment to the development characterized by corruption, in particular in terms of its implications for economic growth. The purpose of this study is therefore to perform an empirical analysis of the effects of corruption on economic growth in Tunisia. As part of formalization inspired by the theory of endogenous growth, and the time series data from BM and ICRG scores over the 1988/2017 period, using a error-correcting model, we estimated the different modalities of the effects of corruption on economic growth. In fact, the obtained results confirm the long-term existence of a direct negative relationship between corruption and economic growth, which implies that an increase of the level of corruption leads to a reduction of GDP. On the other hand, the estimates also revealed that, in the long term, corruption indirectly affects economic growth through different channels, namely the private capital stock, total public expenditure, and the number of students enrolled in primary schools. Our results also showed that corruption has no effect on economic growth in the short term, both directly and indirectly.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.