Influence of corruption on economic growth: a dynamic panel analysis for OECD countries
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Date
2013-08
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Technická Univerzita v Liberci
Technical university of Liberec, Czech Republic
Technical university of Liberec, Czech Republic
Abstract
Corruption and its reduction is one of the constant topics we encounter not only at the level of debates among political and economic authorities, but thanks to its expansion it has become part of everyday life of today's society. The issue of corruption is a major issue in almost every country, including the Czech Republic. We are constantly discovering new cases and the media report on their development. With a certain amount of optimism we can say that in the fight against corruption, the Czech Republic has experienced a positive shift with regard to punishing the culprits of corruption cases, with first convictions currently emerging. Why is corruption so dangerous? Corruption not only undermines macroeconomic and fiscal stability, causing inefficient use of public funds, but if not timely addressed, it causes growing distrust in the legal system and in the state as such. Despite the work of authors who have come to the conclusion that corruption can have a positive impact on economic growth, the dominant view (supported by a much larger number of studies) is that corruption has a negative effect on growth variables and in turn on economic growth. The aim of this paper is to use dynamic panel regression model to verify the hypothesis of the impact of corruption on economic growth on a sample of OECD countries. To express the perceived level of corruption, we used the index of corruption of PRS Group, which has the advantage of having a much longer history and being more consistent in terms of methodology than compared to the much better known the Corruption Perception Index (CPI) drawn up by Transparency International. Its other advantage is that in case of follow-up studies, it will be able to be used in the future, which in the case of CPI will not be possible due to major changes in its methodology.
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corruption, economic growth, dynamic panel data estimation, OECD countries
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978-80-7372-953-0