Does corruption grease or sand the wheels of investment or innovation? Different effects in advanced and emerging economies

Heo, Yuna; Hou, Fangfang; Park, Seongkyu Gilbert

doi:10.1080/00036846.2020.1791313

Cited by 28 publications

(6 citation statements)

References 54 publications

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“…The percentage of investment to GDP increases by around 0.06% for every 1% increase in broad money to GDP. This conclusion is in line with that of Heo et al (2021), who acknowledged that the development of the financial markets limits investment. Real interest rates have a negative impact on investment at 1%.…”

Section: Autoregressive Distributed Lag Resultssupporting

confidence: 91%

Corruption suppression and domestic investment of emerging economies: BRICS and CIVETS groups – panel ARDL approach

Magableh

Hailat

Alqalawi

et al. 2023

JFC

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Purpose This paper aims to examine the effects of corruption control on domestic investment in the BRICS and CIVETS of emerging economies. This paper’s primary goal is to investigate how corruption has impacted domestic private investment in BRICS and CIVETS, empirically evaluate that impact and offer appropriate policy recommendations. Design/methodology/approach This paper uses secondary panel data from the World Bank spanning the period 2000–2020. The data covered the BRICS and CIVETS countries between 2000 and 2020. This study used gross domestic product (GDP) per capita growth, broad money as a percentage of GDP, real interest rate and corruption index as independent variables and domestic investment as a percentage of GDP as a dependent variable. Findings The significant results are presented using the panel, autoregressive distributed lag pooled mean group estimator. Growth in the per-capita GDP, money supply and the suppression of corruption all have long-term, positive and significant benefits on domestic investment. Comparatively, the real interest rate has a significant negative influence on investment, indicating that it may be necessary and beneficial to adopt anti-corruption measures to promote domestic investment. However, the country-specific analysis reveals that the long-term effects of corruption on investment tend to vary across countries, indicating that each country needs to research the issue of corruption independently. Finally, ensuring optimal levels of money supply and interest rates leaded by further control of corruption is necessary for strengthening the investment environment. Originality/value This study suggests several practical implications. For example, legislators and policymakers should pay more attention to anti-corruption policies. Central banks should put more effort into controlling the interest rate.

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Section: Autoregressive Distributed Lag Resultssupporting

confidence: 91%

Corruption suppression and domestic investment of emerging economies: BRICS and CIVETS groups – panel ARDL approach

Magableh

Hailat

Alqalawi

et al. 2023

JFC

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“…Corruption differs across countries and may have significantly different effects [51][52][53]. The authors of [54], for example, focused on firms operating in emerging economies (including Morocco) and showed that greater corruption relates to greater capital expenditures. However, they did not find significant results on innovation for emerging economies.…”

Section: Institutional Quality Indicators and Their Role In Enhancing...mentioning

confidence: 99%

Determinants of Sustainable Open Innovations—A Firm-Level Capacity Analysis

Gyamfi

Sein

2021

Sustainability

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Institutional constraints impede firms’ open innovation. They have been a challenge, obstructing growth and sustainable development. Research on open innovation has shown that the quality of institutions essentially affects innovation in firms. Hence, prior research has made efforts to incorporate the quality of institutions into open innovation analysis. We can use a series of analyses to examine the impact of corruption, the tax system, and other indicators on firm innovation performance. However, developing economies, such as countries in sub-Saharan Africa, represent a specific group of countries that have long been perceived as those mostly deficient in the rule of law, with poor regulatory quality and a great deal of corruption. In these countries, it is also possible to see a lower number of studies, as the inability to obtain quality data to perform empirical analyses can often limit researchers. Nevertheless, employing data from the World Bank’s 2019 Enterprise Survey, this research aimed at exploring the determinants of sustainable open innovation as well as the effect of institutional quality on firms’ capacity utilization and process innovation through a PLS structural equation model analysis. Our research showed interesting findings, such as the fact that the quality of institutions significantly affects firms’ use of OI instruments and capacity utilization. This research also provides for the novelty of the analysis of capacity utilization in an open innovation analysis. The results support the hypotheses that low institutional quality negatively affects firms’ implementation of inbound open innovation instruments, and that there is a strong and positive effect of low institutional quality on firms’ capacity utilization. In addition, we confirm the premise that firms’ implementation of inbound open innovation instruments has a positive and significant influence on firms’ process innovation.

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“…Whereas the greasing the wheel hypothesis argues that an increase of corruption can be beneficial for firms and countries. For instance, the preliminary work of [46] reveals that corruption can enhance efficiency when governing authorities of any country are inefficient. Similarly, in more recent literature [47], higher corruption levels are shown to lead to greater capital expenditure, while corruption positively impacts innovation in advanced countries.…”

Section: Corruption and Domestic Investmentmentioning

confidence: 99%

Crowding-Out Effect of Natural Resources on Domestic Investment: The Importance of Information Communication and Technology (ICT) and Control of Corruption in the Middle East and Central Asia

et al. 2022

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Countries of the Middle East and Central Asia depend heavily on natural resources for their exports, income, and employment. This study is a preliminary investigation that explores the effect of natural resources on domestic investment in a sample of 12 highly resource-dependent countries in the Middle East and Central Asia from 2000 to 2019. The recently advanced cross-sectional dependent auto-regressive distributed lag (CS-ARDL) model and panel quantile regression are employed. The results validate the accelerator theory that an increase of the non-oil GDP growth rate has a robust positive impact on domestic investment, while natural resources crowd-out domestic investment. The long-run estimate of ICT reveals a significant positive impact, while corruption shows a significant negative effect. These findings urge sample resource-dependent countries to focus on developing ICT-based enterprises and control prevailing corruption levels. Moreover, adopting liberal trade policies can also enhance domestic investment opportunities.

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Does corruption grease or sand the wheels of investment or innovation? Different effects in advanced and emerging economies

Cited by 28 publications

References 54 publications

Corruption suppression and domestic investment of emerging economies: BRICS and CIVETS groups – panel ARDL approach

Corruption suppression and domestic investment of emerging economies: BRICS and CIVETS groups – panel ARDL approach

Determinants of Sustainable Open Innovations—A Firm-Level Capacity Analysis

Crowding-Out Effect of Natural Resources on Domestic Investment: The Importance of Information Communication and Technology (ICT) and Control of Corruption in the Middle East and Central Asia

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