Corruption and economic growth in Croatia

Abstract

Today, more and more authors are involved in researching the economic phenomenon of corruption and its impact on many macroeconomic indicators. Nevertheless, transitional surroundings have offered a unique opportunity in history to explore the relationship between corruption and economic growth in entirely different environment from the one in developed western economies. Researching of, at first sight, two unrelated social phenomena gave additional light on the causes of economic growth in Croatia. The researching paper also gives Croatian position among ten transition EU member countries. The corruption perception index was used as the best measuring method of corruption in Croatia and other countries while economic growth was measured by GDP per capita instead of growth rates. We explained reasons why we did so. The time period covered by the research was from 1999 to 2009 for Croatia and from 1995 to 2009 for ten transition EU member countries. Total of 137 cases were evaluated. The researching paper demonstrates the negative impact of corruption on economic growth where the strength of its influence is relatively obvious. It is also evident that the impact of corruption on economic growth is substantially a direct one and that it takes place without a significant time delay. Results for the period of research related to Croatia, more closely fit the observed data of other transition countries. Corruption could be an additional explanation (certainly not the only one) for low or high level of GDP per capita in Croatia. Misunderstanding of all the factors that encourage the economic growth may lead to macroeconomic structural misbalances in Croatian economy.

Corruption, Political Instability and Sustainable Development: The Interlinkages

“…Meon and Weill (2010) supported the phenomenon of negative effect of corruption on economic growth for the countries having inefficient political institutions. The corruption increases economic growth is also empirically proved by Piplica and Covo (2011) for Croatia (see also Huang, 2016 for South Korea).…”

“…The sustainable development measured by an index covering the aspects of nation's economic, social and environmental development may enhance the contribution of the study. Piplica and Covo (2011) have also analyzed the influence of corruption on economic growth in Croatia along with ten transition European Union economies. They evidenced higher level of corruption in Croatia than ten transition countries and a positive impact of corruption on economic growth.…”

Causality between corruption and the level of GDP

“…Lui writes, 'corruption has two effects 1) a positive level (short-term) effect on allocative efficiency and 2) a negative effect on the economies long-term growth rate' . However, Piplica and Čovo (2011) find that the impact of corruption on economic growth takes place without a significant time delay.…”