GJEB 14 3 4 (1) (original) (raw)
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Some of the economists believe that current volume of international trade is less than the volume that has been predicted by the conventional trade theories. Unobserved barriers (i.e. Corruption) are one of the factors that can reduce the volume of trade fromthe amount that has been predicted by these conventional theories. This research has studied the role of corruption in the trade volume of selected countries in the Middle East and Latin America. In this study we have used an augmented gravity model of trade and panel data. In addition for estimating the model, we have used fixed effects vector decomposition method. The results showed that the trade is inverted-U shape function of corruption and the little amount of corruption in both regions initially helps the amount of trade to increase but when it reaches the threshold, the volume of the trade reduces in the studied countries. In addition, the results indicated that the existence of corruption in the importing country has a negative effect on the trade volume of the studied countries and it can reduce the amount of the bilateral trade.
The Causal Relationships Between Corruption, Investments and Economic Growth in GCC Countries
SAGE Open
This paper investigates the impact of corruption on economic growth and investments in the Gulf Cooperation Council countries over the period 2003 to 2016 using the panel vector error correction model and the panel fully modified ordinary least squares method developed by Pedroni. We find that there is at least one cointegration relationship between the variables. The results of Granger causality tests indicate that corruption does not cause economic growth, foreign and domestic investments in the short run. Moreover, we find that there is strong long run unidirectional causality running from corruption to economic growth, foreign direct investment, domestic investment, and domestic credit. Estimation of the panel fully modified ordinary least squares model indicates that corruption has a negative impact on economic growth whereas a positive influence on domestic investment. Hence, the policy implication resulting from this study is that the improvement of corruption perception inde...
Openness and Corruption: A Time-Series Analysis
Zagreb International Review of Economics and Business, 2009
The paper empirically examines the relationship between trade openness and the level of corruption in Pakistan using annual time-series data for the period 1984 to 2007. The analysis shows that trade openness negatively affects corruption in Pakistan. The results are robust to controlling for other corruption determining variables and various model specifications. Sensitivity analysis shows that economic development and political liberalization reduce corruption levels. Other explanatory variables i.e. human and physical capital, government expenditures, population, inflation and defense expenditures significantly affect corruption in the expected directions.
International Trade, Corruption and Economic Growth: Evidence from Selected Sub-Saharan Countries
Problemy Ekorozwoju
Sustainable development goal 17 emphasizes the importance of international trade in achieving inclusive growth. Likewise, countries with high level of corruption will experience limited growth. In order to examine the causality, this study considers the impact of international trade and corruption on the economic growth of selected sub-Saharan African countries (Angola, Ghana, Kenya, Nigeria, and South Africa) from the period 2000-2019. The granger causality test and fixed effect method of estimation were adopted. The result of the granger causality tests shows that there is no causality between import and economic growth, there is unidirectional causality between export and economic growth and there is no causality between control of corruption and economic growth. Furthermore, it was discovered that export, import, and control of corruption have a positive impact, 25.4%, 32%, 45.5% respectively, on the economic growth of selected sub-Saharan African countries. Hence from these fin...
Corruption and Trade jei Journal of Economic Integration
2014
Using a panel data set for 146 countries over the period 1984~2007, this study contributes in the area of trade-corruption linkages by highlighting the non-monotonic relationship between trade and corruption and significance of complementary policy reforms in shaping the link. Findings of the study suggest that trade increases corruption in a linear specification while its effect on corruption decreasing in a non-linear specification. The analysis exhibits that this non-linear nature of the relationship is worth noting and help answering the question why the literature on the relationship between trade and corruption is not conclusive. Furthermore, we make argument and find empirical support to our proposition that this is not just openness to trade that can reduce corruption but there are complimentary policy reforms that cause a decline in corruption. Findings of the study are robust to alternative specifications, econometric techniques, control of nonlinearity, control of interac...
Growth and corruption in Arab countries: What type of relationship connects them?
Journal of Economics and International Finance (JEIF), 2016
This study aims to investigate the relationship between corruption and growth in the context of the Arab world. By controlling the different variables that affect growth, the study tries to focus on how corruption could have affected growth and in which way. The literature leans towards corruption having a negative impact on growth and development, however such view is not pervasive as there are some arguments emphasizing that there might be positive implications for corruption. Moreover, there are some other variables including type of political regime, degree of development, poverty levels, etc that shape the relationship between corruption and growth. The interaction between those variables and corruption produces different impacts on growth. Qualitative analysis shows that among Arab countries there is certainly a negative relationship between the gross domestic product (GDP) per capita and high level of corruption. However, there is no exact relationship between the type of political regime and corruption. Additionally, the study estimated a panel data random effects model to evaluate the impact of corruption on economic growth in 15 Arab countries during the period (1998 to 2009). The study results support the negative direct impact of corruption on growth in this sample of Arab countries, which confirms "sanding the wheels" hypothesis, yet this impact highly depends on other variables, and namely the governance structure. A good governance structure shows that corruption has a determinal impact on growth. When the governance structure is very poor the impact of corruption on growth tends to be lower or most probably positive, that goes along with "greasing the wheels" hypothesis. Thus, it is necessary to improve the governance quality in Arab countries hand in hand with controlling corruption, in order to achieve better growth performance.
International Journal of Economics and Financial Issues, 2021
This study examines the relationship between corruption and economic growth in Tunisia from 1992 to 2018 by focusing on the role of the discretionary power and the distortion of the public spending. To explore the relationship between the variables of interest, the ARDL Bound testing co-integration approach of Pesaran and Shin (1999) was used. The empirical results showed that corruption negatively affects the long-term economic performance by suggesting that large-scale public investment is not necessarily desirable in an environment characterized by corruption as this leads to the waste of public funds. However, the estimation of an ECM model of short-term dynamics shows that corruption is associated with the increase of the real GDP per capita. Therefore, these results support the idea that corruption undermines long-term economic performance and call for institutional reforms to improve the quality of governance as a pre-condition for any broad-based economic growth.
International Journal of Economics and Financial Issues, 2019
Corruption is like an epidemic that has the power to destroy a country's socioeconomic, financial, human and political environment. It has severe consequences in developing countries. This study has examined the impact of existing human, political, financial and economic factors on corruption for a set of panel countries. The data from 1995 to 2004 is used to serve this purpose. For examining the stationarity of the variables, Levin-Lin-Chu (2002), Fisher-ADF and Fisher-PP tests are applied. Pedroni Residual based Co-integration and FMOLS by Phillips and Hansen (1990) test has been used for examining the co-integration among the variables of the model. The speed of adjustment and short-run relationship has been tested through VECM. The estimated results show that exports, GDP per capita and political stability have a negative impact on corruption, whereas imports, financial development, human development index, bureaucracy, democracy and the rule of law have a positive relationship with corruption. The simplified procedures of import and export will help in reducing the practice of bribes and corruption. The governments should take the necessary steps not only to increase the income, but also to improve the people's standard of living. There should be improvements in the political system. Democracy is also helpful to get rid of corruption.
An Empirical Investigation Between Trade Liberalization And Corruption: A Panel Data Approach
Journal of Economics and Sustainable Development, 2013
The present study empirically investigates the relationship between trade liberalization and corruption, using data from twenty four countries divided into three panels: low income, middle income and high income countries for a 13 years period, from 1995-2007. That period is taken to see this effect after the establishment of WTO. Many other economic and non economic variables have also been incorporated in this study. Fixed effect model have been used for estimation. The results show that trade liberalization is both statistically significant and negatively correlated to the corruption level of these countries included in the study. The results are robust even after controlling for other variables like economic freedom, democracy, size of bureaucracy, average income level and level of education. The focus of study is mainly on South Asian nations. Because according to the recent survey published by Transparency International related to Corruption, these nations are at the bottom of ranking ladder.