Insights Into the External Debt, Corruption and Economic Growth Nexus: A Case Study

Saengchai, Sakapas; Boonrattanakittibhumi, Chanathat; Urairak, Buppachart

doi:10.9770/jssi.2019.9.2(13)

Cited by 2 publications

(5 citation statements)

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“…However, corruption which is negative and statistically significant in the short run did not exhibit the same effect in the long run. This shows that the negative effect of corruption on economic growth is short-lived such that this effect did not manifest on growth potentials of the country in the long run (Bitterout and Simon-Kengne, 2020; Ivanyna et al , 2016; Monte and Pennacchio, 2020; Saengchai et al , 2019). This is an indication that this cancer of corruption is gradually eroding the moral fiber of the country at the detriment of economic growth.…”

Section: Estimation Resultsmentioning

confidence: 99%

“…The model specification has real GDP (RGDP) as the dependent variable while external debt (EXD), external debt service (EXDS), corruption (CORR), inflation (INFL) and investment (proxy by capital accumulation-K) as the regressors. In keeping with the debt overhang hypothesis and the modified Solow growth model as adopted in Akram and Rath (2018), Hassan et al (2018) and Saengchai et al (2019), the linear hybrid form of our model which incorporates other variables of interest is specified as follows:where lnRGDP, lnEXD, lnEXDS, lnCORR, lnINFL, ln K are series lograrithmic values, error term is ε t and the betas represent coefficients to be estimated.…”

Section: Model Specification and Methodologymentioning

confidence: 99%

“…On the debt-growth debate, researches have validated the Keynesian theory that a certain level of debt is required for economic advancement while some argued that debt in whatever form is detrimental to the growth aspiration of any country (Amann and Middleditch, 2017; Liaqat, 2019; Asteriou et al , 2020). Also, the results of studies such as Bardhan (2018) and Saengchai et al (2019) produced mixed outcomes about the growth-corruption hypothesis. Below is a review of relevant literatures on the growth-debt-corruption debate.…”

Section: Theoretical and Empirical Reviewmentioning

confidence: 99%

“…Government external debts, corruption and GDP relationship formed the basis of the study by Saengchai et al (2019) for five ASEAN nations using estimation of direction and degree of regression as well as the causal relationship, and cautioned the countries in their quest for more debts. Not only that, the result further confirmed a bi-directional inter-dependence between foreign debt and economic growth with no association for corruption and economic growth in the selected studied countries.…”

Section: Theoretical and Empirical Reviewmentioning

confidence: 99%

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Pre-COVID-19 evaluation of external debt, corruption and economic growth in South Africa

Olamide

Maredza

2021

REPS

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PurposeThis study is a pre-COVID-19 exposition of the existing situation about external debt-GDP relationship, incorporating corruption into the hypothesis, making South Africa the object of the study. The aim is to examine the causal relationship between corruption, economic growth and external debt, and in the end proffer solutions to the problems arising therefrom.Design/methodology/approachThe study employed ARDL technique on time series data running from 1990 to 2019 with real gross domestic product as the dependent variable and external debt, external debt servicing, corruption, inflation and capital formation as regressors. Necessary tests that include unit root, cointegration, CUSUM and CUSUMSq, normality, serial correlation and heteroscedasticity were performed on the model.FindingsThe study shows that corruption, inflation and external debt servicing exert negative influences on economic growth while the effect of investment on growth was positive. External debt's effect in the short run was positive while its long-run effect on growth was negative. Among other things, the need to improve and strengthen public institutions in addition to targeting tax evaders and avoiders for increased government revenue were emphasized.Originality/valueThe study incorporates corruption into the country specific debt-GDP debate as against earlier studies that excluded corruption in their time series analysis or that were cross-country based. The authors also exposit the existing knowledge of the debt-GDP hypothesis before the outbreak of COVID 19 pandemic. This is expected to serve as a precursor to subsequent studies on the rising debt of South Africa during and after the pandemic.

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Section: Estimation Resultsmentioning

confidence: 99%

Section: Model Specification and Methodologymentioning

confidence: 99%

Section: Theoretical and Empirical Reviewmentioning

confidence: 99%

Section: Theoretical and Empirical Reviewmentioning

confidence: 99%

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Pre-COVID-19 evaluation of external debt, corruption and economic growth in South Africa

Olamide

Maredza

2021

REPS

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“…They also align with recent evidence of increasing inequality in financially advanced economies. Saengchai (2019) investigated the association between government external debt, corruption, and ECNG in five ASEAN countries. Using secondary data from 1990 to 2015, variables such as external debt stock, gross capital formation, GDP, interest on external debt, exports, and corruption were considered.…”

Section: Introductionmentioning

confidence: 99%

Institutional Quality, Corruption, and Income Inequality - A Panel Study of Selected SAARC Economies

Abbas,

Shahzad,

Raees

2023

Am. J. Econ. Bus. Innov.

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Previous studies have primarily focused on issues related to income inequality, aiming to identify the underlying causes and urging swift action to mitigate such disparities. In this context, the current article expands upon existing literature by introducing the influence of corruption and institutional quality. This study contributes to the existing knowledge by investigating the interplay between institutional quality, corruption, and income inequality within SAARC countries spanning 2000 to 2021, sourced from World Governance Indicators, Transparency International, Global Consumption and Income Project, and World Development Indicators. After analysed the properties of data, FMOLS analytical approach employed. The empirical analysis validates the enduring effects of the examined factors on income inequality over the long term. The findings indicate that institutional quality exerts a notable and favorable influence in reducing income inequality. Conversely, corruption, the combined impact of corruption and institutional quality substantially and adversely affect income inequality. Addressing the imperative of ensuring an equitable income distribution across the SAARC economies necessitates implementing comprehensive strategies to foster enduring institutional quality and effectively manage corruption. Study’s conceptual and empirical advancements carry significant implications for policy formulation within this region. They offer valuable insights for the region’s endeavors to ameliorate income inequality. This study underscores the importance of measures to enhance institutional quality and combat corruption within SAARC countries. Such measures should be strategically designed to tackle income distribution challenges and promote greater equity.

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Insights Into the External Debt, Corruption and Economic Growth Nexus: A Case Study

Cited by 2 publications

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Pre-COVID-19 evaluation of external debt, corruption and economic growth in South Africa

Pre-COVID-19 evaluation of external debt, corruption and economic growth in South Africa

Institutional Quality, Corruption, and Income Inequality - A Panel Study of Selected SAARC Economies

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