Economic uncertainty and corruption: evidence from a large cross-country data set

Abstract

A vast amount of research has considered numerous causes and correlates of corruption. Also, there have been many studies of the consequences of various forms of uncertainty. However, exploration of the nexus between economic uncertainty and corruption appears scarce. After providing an intuitive and heuristic linkage between general economic uncertainty and corruption, this article uses a large cross-country data set to augment a fairly standard model with simple proxies for uncertainty and to investigate how economic uncertainty might affect the prevalence of corruption. In addition, a quantileregression framework is used to judge how the strength of various covariates may differ with the level of corruption. Seven main points emerge from the estimates. First, economic uncertainty is associated positively with corruption, and the relation seems to be robust across measures of uncertainty and corruption. Second, quantile-regression estimates indicate considerable parametric heterogeneity across the distribution of corruption. Third, Gross Domestic Product (GDP) per capita has the expected corruption-mitigating role. Fourth, increased political rights and civil liberties also appear to lower corruption. Fifth, greater government consumption is associated with lower corruption. Sixth, while the hyperinflation dummy lacks significance in most OLS regressions, its significance varies across the distribution of corruption. Seventh, neither police force nor government subsidies shows significance, but transition economies have more corruption.

The impact of fiscal policies on corruption: A panel analysis

“…Treisman (2000) and Paldam (2001Paldam ( , 2002 found that corruption is a povertydriven disease which vanishes when the country becomes richer. Goel and Ram (2013) substantiated these findings and documented that transition economies have more corruption than developed countries. Gundlach and Paldam (2009) pointed out that the cross-country pattern of corruption can be fully explained by the cross-country pattern of income, and De Rosa et al (2010) found a strong correlation of 0.81 between GDP and the level of corruption.…”

The effect of the Internet on corruption awareness and corruption incidence in the EU

“…Furthermore, most of the studies conclude that, in general, women are less corrupt than man (Rivas 2012;Torgler & Valev 2010). From a macroeconomic point of view, inflation, economic development, economic freedom, income distribution (Ata & Arvas, 2011) as well as economic uncertainty (Goel and Ram, 2013) seem to be significantly related to corruption. Moreover, Rehman & Naveed (2007) found that GDP per capita, the unemployment rate, public expenditure and secondary school enrolments are significant factors influencing the level of corruption in a country.…”

The Role of Income Uncertainty in the Corruption–Growth Nexus

“…There is empirical evidence corroborating how corruption has a significant effect on income uncertainty. For example, based on a cross-country data, Evrensel (2010) finds that higher corruption incidence increases growth volatility, whereas Goel and Ram (2013) argue that economic uncertainty has a positive association with corruption. Campos, Lien, and Pradhan (1999) studying firm survey data have established that the predictability of corruption can have a comparable effect on the investment decision to that of a lower incidence of corruption.…”