Determinants of Corruption and their Relationship to Growth

Abstract

Corruption defined as the exploitation of the public institute for personal benefit has displayed itself in many societies in different ways throughout the history. Lack of information regarding presence and pervasiveness of corruption in central planning economies has been removed as a result of a transition to free market economies and the phenomenon of corruption has begun to be examined through diverse angles. Thus, in this study, the determinants of corruption were investigated and corruption-growth relationship was examined between 2002 and 2010. As for the parameters believed to determine corruption, openness of economy, size of the public, economic freedom, political stability, GDP per capita, urbanization growth rate, inflation, EBRD and HDI index regarding education and health were taken into consideration. Investigation of the relationship between the CPI (Corruption index) and the aforementioned variables and corruption-growth relationship were analyzed by means of panel data analysis.