Causes Of Corruption: Dynamic Panel Data Analysis Of Some Post Soviet Countries And East Asian Countries

Abstract

Corruption is an important social and ethical problem. Determining root causes of it should be the first step to fight it. In this study, using a dynamic panel data approach, we try to determine the likely causes of level of corruption in some of the former USSR countries and East Asian countries. Regression results show that, past values of corruption and the level of political rights in a country are the factors that are most affecting the level of corruption in a country. Degree of opennes to the foreign trade, interference of government in the economy, FDI inflows, degree of civil liberties seem not to have significant effect on corruption level in a country. Level of inflation, unemployment, per capita GDP seems not to be among the causes of corruption, but rather they are <span>“caused by the corruption”. There seems no significant differences between East </span><span>Asian Countries and post-communist countries in terms of corruption level, when the effect of other variables are kept constant. </span>

The effect of corruption, trade openness and political stability on foreign direct investment: Empirical evidence from BRIC countries

“…Moreover, the long run coefficient of -0.02 indicates that a one unit increase in corruption will lead to a decrease of FDIs in BRIC countries by 1.74% in the long run. This negative relationship between corruption and FDI can be supported by many past literature like, Freckleton et al (2012), Barassi and Zhou (2012), Bayar (2011), Javorcik and Wei (2009), Cuervo-Cazurra (2008) and Hakkal et al (2008). Though, the findings of these studies were significant unlike the results of this research.…”

“…If the promises are not received by the briber, he or she cannot enforce the bribery in the court of law as, unlike legitimate contract, bribes are not legally binding agreements (Cuervo-Cazurra, 2008). Corruption hinders both private and government investment spending and dampens foreign investments to the host country (Bayar, 2011). In addition, like most literature, it was supported that there is a significant association between corruption and FDI when estimating FDI inflow in 55 countries across four different time periods (Mudambi et al, 2013).…”

Corruption Prevention and Economic Growth: A Mediating Effect of Rule of Law

“…There is not a statistically significant relationship between the government interventions the economy and the corruption. (Bayar, 2011) Rijckeghem and Weder examined panel data of 31 countries from 1982 to 1994, find a statistically significant negative relationship in the long term between corruption and the ratio of public sector employees' wage level to the wage level of the employees in the private productive sectors. On the other hand, authors cannot find a relationship between either education and corruption or gross domestic product per capita and corruption.…”

“…Many researchers show that corruption has a negative impact on the economic growth, rule of law, quality of education, prices, trade and so on. (Ades & Di Tella, 1997;Ahmet, 2012;Bayar, 2011;Berkman, 1988;Dridi, 2014;Goel & Rich, 1989;Gyimah-Brempong, 2002;Lee, 1981;Mo, 2001;Podobnik & 2008;Sung, 2004;Swamy, Knack, Lee, & Azfar, 2001;Van Rijckeghem & Weder, 2001). In the early 1980s, many international organizations and institutions work jointly to produce big data of corruption and provide a ground for empirical research in this field.…”

The Impact of Environmental Regulations, Corruption and Economic Freedom on Economic Growth: Empirical Evidence from China

“…This implies a negative correlation between corruption and economic growth. There is nearly a consensus about corruption in the theories that it is harmful for a country's economy; it hampers both private and government investment spending, discourages investments, inhibits efficiency of public servies, distorts income distribution, harms democracy and leads to waste of resources (Bayar, 2011). To sum up, corruption impact on economic growth has created two positions.…”