The Impact of Corruption on Economic Growth

Abstract

Even though corruption is correlated to political and moral degradation, there is no consensus on the impact of corruption on economic growth. Although, theory leans to the view that corruption has negative impact on growth, still empirical evidence and counter arguments show that there might be positive implications for corruption. This paper compares the corruption impact on growth in 17 developed European countries vs. 15 developing MENA countries using a pooled OLS model and a random effects model for the period (1999-2012). This paper contributes to the literature by examining the impact of corruption on growth in scarcely examined countries in Europe and MENA. Also, the paper findings are intriguing because they show that the region, as a proxy to degree of development, significantly influences the effect of corruption on economic growth.

Corruption and economic growth in the Republic of Serbia

“…Using statistical methods, the nature of the relationship between corruption and economic growth will be analysed in more detail, which should contribute to a more complete understanding of the phenomenon of corruption and its social and economic consequences, as well as to indicate the negative effects of these deep-rooted social problem. Some theories indicate that corruption can have a positive effect on economic growth in the short term, by bypassing inefficient procedures, but that in the long term it creates additional inefficiencies, while the interdependence of the mentioned two categories is determined by the action of numerous political and institutional factors (Farrag & Ezzat, 2020). Some experts often say that one's own theses should be reconsidered, since two-thirds of the world are making progress despite the fact that they do not have developed democracy and democratic institutions, and at the same time they are positioned in the second half of the world list that measures corruption.…”