Corruption and economic growth: New empirical evidence

The nexus between corruption and economic growth has been examined for a long time. Many empirical studies measured corruption by the reversed Transparency International's Perception of Corruption Index (CPI) and ignored that the CPI was not comparable over time. The CPI is comparable over time...

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Bibliographic Details
Published inEuropean Journal of Political Economy Vol. 60; p. 101810
Main Authors Gründler, Klaus, Potrafke, Niklas
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.12.2019
Elsevier Science Ltd
Subjects
Autocracy
Corruption
Deviation
Economic growth
Economic models
Foreign investment
Inflation
Panel data
Perceived corruption
Political economy
Transparency
Panel data
Economic growth
C23
K40
H11
Perceived corruption
O11
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Summary:The nexus between corruption and economic growth has been examined for a long time. Many empirical studies measured corruption by the reversed Transparency International's Perception of Corruption Index (CPI) and ignored that the CPI was not comparable over time. The CPI is comparable over time since the year 2012. We employ new data for 175 countries over the period 2012–2018 and re-examine the nexus between corruption and economic growth. The cumulative long-run effect of corruption on growth is that real per capita GDP decreased by around 17% when the reversed CPI increased by one standard deviation. The effect of corruption on economic growth is especially pronounced in autocracies and transmits to growth by decreasing FDI and increasing inflation.
ISSN:0176-2680
1873-5703
DOI:10.1016/j.ejpoleco.2019.08.001