How Does Corruption Affect Economic Growth? An Econometric Analysis

Abstract

This paper investigates the growth-corruption link in a non-linear relationship in interaction with freedom status, recruitment quality and openness of the economy, and looks into the impact of corruption using cross-sectional and panel data. Examining the growth-corruption link in interaction with recruitment quality is new in the literature. A rigorous econometric exercise has been done to conduct the investigation and various techniques have been applied to have robust results. It is found that corruption exerts a positive but small impact on economic growth, which varies with changes in freedom status, executive recruitment quality and openness of the economy.