Corruption and economic growth in India and Nigeria

Obamuyi, Tomola Marshal; Olayiwola, Saheed O.

doi:10.22367/jem.2019.35.05

Cited by 20 publications

(20 citation statements)

References 26 publications

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“…Osei-Assibey et al (2018) show that corruption affects growth by increasing capital outflow in sub-Saharan Africa. Similarly, Obamuyi and Olayiwola (2019) find that corruption adversely affects growth in India and Nigeria.…”

Section: Literature Review 21 Corruption and Growthmentioning

confidence: 97%

The effects of corruption on growth, human development and natural resources sector: empirical evidence from a Bayesian panel VAR for Latin American and Nordic countries

Urbina

Rodríguez

2021

JES

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PurposeThe purpose of this paper is to analyze the effects of corruption on economic growth, human development and natural resources in Latin American and Nordic countries.Design/methodology/approachUsing the hierarchical prior of Gelman et al. (2003), a Bayesian panel Vector AutoRegression (VAR) model is estimated. In addition, two alternative approaches are considered, namely, a panel error correction VAR model and an asymmetric panel VAR model.FindingsThe results reveal some relevant contrasts: (1) in Latin America there is support for the sand the wheels hypothesis in Bolivia and Chile, support for the grease the wheels hypothesis in Colombia and no significant impact of corruption on growth in Brazil and Peru, while in Nordic countries the response of growth to shocks in corruption is negative in all cases; (2) corruption negatively affects human development in all countries from both regions; (3) corruption tends to spur natural resources sector in Latin American countries, while it is detrimental for natural resources sector in Nordic countries.Research limitations/implicationsThe panel VAR approach uses recursive scheme identification. The authors have analyzed robustness using alternative ordering of the variables. The authors also have followed two alternatives suggested by the Referee: a panel error correction VAR model and a panel asymmetric VAR model. However, another more sophisticated identification scheme could be used. Also other variables could be introduced in the VAR model.Practical implicationsRegardless of the issue of the “grease” vs the “sand the wheels” debate, corruption should be reduced because it is anyway harmful for human development. The differences in the results for Latin American and Nordic countries show that the effects of corruption have to be assessed considering the different institutional and economic conditions of the countries analyzed.Social implicationsGovernments should seek to reduce corruption because, despite corruption can have mixed effects on economic growth in some contexts, it is anyway harmful for human development. Besides, the finding that in some Latin American countries more activity in the extractive industries is generated by means of corruption confirm the association between corruption and extractivism found by Gudynas (2017) and can explain why there are issues of environmental damage and social conflict linked to natural resources in those countries.Originality/valueThe present study contributes to the literature by presenting evidence on the effects of corruption on growth, human development and natural resources sector in Latin American and Nordic countries. It is the first study on economics of corruption which directly compares Latin American and Nordic countries. This is relevant because there are important differences between both regions since Latin American countries tend to suffer from widespread corruption, while the Nordic ones have a high level of transparency. It is also the first in using a Bayesian panel VAR approach in order to evaluate the effects of corruption.

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Section: Literature Review 21 Corruption and Growthmentioning

confidence: 97%

The effects of corruption on growth, human development and natural resources sector: empirical evidence from a Bayesian panel VAR for Latin American and Nordic countries

Urbina

Rodríguez

2021

JES

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“…Haque & Kneller (2015) also examined using panel data from 63 countries for the period 1980-2003, showing that corruption reduces the returns on public investment and makes it ineffective in increasing economic growth. Another research conducted by Obamuyi & Olayiwola (2019) in India and Nigeria shows that with the transmission mechanism, corruption has a negative impact on economic growth through investment and human resources in both countries. Corruption decreases the growth rate of per capita income directly by reducing the productivity of existing resources and indirectly affects the reduction in investment.…”

Section: Introductionmentioning

confidence: 99%

The Determinants of Economic Growth: Empirical Study of 10 Asia-Pacific Countries

2021

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The purpose of this research to examine influence several independent variables, especially corruption, foreign direct investment (FDI), population growth, and government expenditure on the economic growth of 10 Asia-Pacific countries, and prove the hypothesis of the sand wheels theory whether corruption causes a decline and a slowdown in economic growth. This study uses panel data. The results showed that the variables of corruption have a negative impact on economic growth, foreign direct investment (FDI), and government expenditure have positives that significantly affect the level of economic growth in 10 Asia-Pacific countries. However, population growth does not significantly affect economic growth. The result implies that corruption has a negative effect on economic growth in 10 Asia-Pacific countries. Such an outcome provides evidence and confirms the hypothesis that corruption can sand the wheel of an economy. Countries must eradicate all forms of corruption and maintain a conducive investment climate so that there is a level of trust, especially in the Asia-Pacific countries, to create productive economic growth.JEL Classification: O47, D73, C12How to Cite:Nasir, M. S., Wibowo, A. R., & Yansyah, D. (2021). The Determinants of Economic Growth: Empirical Study Of 10 Asia-Pacific Countries. Signifikan: Jurnal Ilmu Ekonomi, 10(1), 149-160. https://doi.org/10.18752/sjie.v10i1.15310.

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“…Cieślik and Goczek (2018) consider a panel of 29 post-communist economies of Central and Eastern Europe and the former Soviet Union and find a negative impact of corruption on growth. In turn, Obamuyi and Olayiwola (2019) find that corruption hampers growth in India and Nigeria. Considering a dataset of 34 OECD countries during the period 1995-2014, Baklouti and Boujelbene (2019) also find that increased corruption leads to a decrease in economic growth.…”

Section: Effects On Economic Growthmentioning

confidence: 98%

“…This issue is relevant because it conditions the specification and interpretation of econometric models since the definition of the concept determines what gets modelled and what empiricists see in the data. Most of empirical studies use a working definition according to which corruption is understood as the abuse of public office for private gain; see, for example, Mauro (1995), Akçay (2006), Aidt et al (2008), Ullah and Ahmad (2016), Obamuyi and Olayiwola (2019). However, this definition tends to be too broad and imprecise because there could be much debate about what constitutes "abuse."…”

Section: Research Challengesmentioning

confidence: 99%

The Consequences of a Grabbing Hand: Five Selected Ways in Which Corruption Affects the Economy

Urbina

2020

ECON

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This article provides a survey of the existing literature on the effects of corruption on economic growth, foreign direct investment, income inequality, human development, and natural resources sector. Both the theoretical arguments and the empirical evidence are considered. It is found that: i) Several studies support a negative impact of corruption on growth (sand the wheel hypothesis), but there are also studies supporting a positive impact (grease the wheels hypothesis); ii) Concerning the impact of corruption on foreign direct investment, the evidence is also mixed since there are studies supporting a negative effect (the "grabbing hand" view), a positive effect (the "helping hand" view), and even no significant effect; iii) The great majority of studies find that corruption generates more income inequality, although some studies find an inverse relationship in regions where the informal sector is large; iv) There is a strong consensus regarding that corruption hampers human development by affecting aspects like poverty, education and health; v) Most of studies show that there is a direct association between corruption and the natural resources sector, especially in the mining, oil and gas industries. In addition, research challenges of economics of corruption in aspects like the definition of corruption, multidisciplinary perspective, econometric specification, and data issues are discussed.

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Corruption and economic growth in India and Nigeria

Cited by 20 publications

References 26 publications

The effects of corruption on growth, human development and natural resources sector: empirical evidence from a Bayesian panel VAR for Latin American and Nordic countries

The effects of corruption on growth, human development and natural resources sector: empirical evidence from a Bayesian panel VAR for Latin American and Nordic countries

The Determinants of Economic Growth: Empirical Study of 10 Asia-Pacific Countries

The Consequences of a Grabbing Hand: Five Selected Ways in Which Corruption Affects the Economy

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