Corruption-Growth Nexus in the Emerging Market Economies: Empirical Evidence Using Panel Data

Authors

  • Muhammad Atiq ur Rehman Higher Education Department, Punjab, Lahore, Pakistan
  • Furrukh Bashir Bahauddin Zakariya University, Multan, Pakistan
  • Muhammad Khalid Rashid Higher Education Department, Punjab, Lahore, Pakistan
  • Altaf Hussain The Islamia University of Bahawalpur, Pakistan

DOI:

https://doi.org/10.52131/joe.2023.0501.0117

Keywords:

Corruption, Growth, Panel data, Emerging markets

Abstract

Corruption is a governance dilemma in emerging market economies (EMEs) with fragile law enforcement systems. Using annual data from 1997 to 2020, this study explores corruption-growth nexus in the World's most important emerging market economies. Since it takes into account the intrinsic characteristics of each country, the panel data fixed effect estimation method appears to be the best option. The fixed effect estimation results reveal that corruption has a significantly negative impact on economic growth of the EMEs under consideration, after controlling for the government spending, investment, human capital, trade openness, and population. The random effect estimation method used as a fallback does not significantly alter the empirical findings. A noteworthy fact revealed by the pragmatic findings is that when corruption is significant, the effect of government spending on economic growth becomes negative due to embezzlement and misallocation of public coffers.

Author Biographies

Muhammad Atiq ur Rehman, Higher Education Department, Punjab, Lahore, Pakistan

Assistant Professor of Economics

Furrukh Bashir, Bahauddin Zakariya University, Multan, Pakistan

Assistant Professor, School of Economics

Muhammad Khalid Rashid, Higher Education Department, Punjab, Lahore, Pakistan

Professor of Economics

Altaf Hussain, The Islamia University of Bahawalpur, Pakistan

Assistant Professor, Department of Economics

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Published

2023-03-31

How to Cite

Rehman, M. A. ur, Bashir, F., Rashid, M. K., & Hussain, A. (2023). Corruption-Growth Nexus in the Emerging Market Economies: Empirical Evidence Using Panel Data. IRASD Journal of Economics, 5(1), 140–148. https://doi.org/10.52131/joe.2023.0501.0117

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