Spatial spillover effects of corruption in Asian countries: Spatial econometric approach

Abstract

Despite its vital importance in economic analysis and policy recommendation, the spatial effects of corruption as well as its contagiousness were less addressed in the literature of corruption. Hence, the purpose of this study was to investigate the spatial effects of corruption in Asian countries during the period from 2012 to 2019 using dynamic spatial autoregressive (SAR) models. According to the results, the existence of positive spatial spillover effects of corruption in Asian countries was confirmed; meaning that the increase of the corruption indicators in neighbouring countries had a positive effect on the corruption in one country. Moreover, the level of corruption in the previous periods had a positive and significant effect on the current level of corruption in the studied countries. On the other hand, the existence of a U‐inverted relationship between GDP and corruption was confirmed in Asian countries. Finally, the results of the study indicated that the increase of the government size in Asian countries increases the level of corruption.