The objective of this paper is to analyze the role of democracy in the relations hip between corruption and economic growth in EMCCA mem ber countries over the period 2002-2020. The results obtained from this study, using the dynamic panel of the generalized method of moments (GMM), confirm the “grain of sand in the economy’s wheels” hypothesis in the EMCCA countries. Furthermore, taking into account the interactive influence of democracy in the corruption-growth relationship reveals that democracy could reduce the negative effects of corruption on economic growth. The results of the study suggest that the promotion of democratic norms is crucial to limiting the level of corruption and stimulating economic growth in the EMCCA sub-region.
KeywordsCorruptionDemocracyEconomic GrowthGeneralized Method of Moments
Aidt, T., Dutta, J., & Sena, V. (2008). Governance Regimes, Corruption and Growth: Theory and Evidence. Journal of Comparative Economics, 36, 195-220. https://doi.org/10.1016/j.jce.2007.11.004
Amira, Z. (2014). Corruption’s and Democracy’s Effects on Economic Growth. https://mpra.ub.uni-muenchen.de/54535/
Arellano, M., & Bond, S. (1998). Dynamic Panel Data Estimation Using DPD98 for Gauss: A Guide for Users. Review of Economic Studies, 58, 277-297. https://doi.org/10.2307/2297968
Arellano, M., & Bover, O. (1995). Another Look at the Instrumental Variable Estimation of Error-Components Models. Journal of Econometrics, 68, 29-51. https://doi.org/10.1016/0304-4076(94)01642-D
Baliamoune-Lutz, M., & Ndikumana, L. (2009). Corruption and Growth: Exploring the Investment Channel. University of Massachusetts-Amherst, Department of Economics.
Bardhan, P. (1997). Corruption and Development: A Review of Issues. Journal of Economic Literature, No. 35, 1320-1346.
Barro, R. (1990). Government Spending in a Simple Model of Endogenous Growth. Journal of Political Economy, 98, S103-S125. https://doi.org/10.1086/261726
Beck, P. J., & Maher, M. W. (1986). A Comparison of Bribery and Bidding in Thin Markets. Economic Letters, 20, 1-5. https://doi.org/10.1016/0165-1765(86)90068-6
Blundell, R., & Bond, S. (1998). Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics, 87, 115-143. https://doi.org/10.1016/S0304-4076(98)00009-8
Cooper Drury, A., Krieckhaus, J., & Lusztig, M. (2006). Corruption, Democracy, and Economic Growth. International Political Science Review, 27, 121-136. https://doi.org/10.1177%2F0192512106061423
Freedom House (2020). A Leaderless Struggle for Democracy. https://freedomhouse.org/report/freedom-world/2020/leaderless-struggle-democracy
Ghulam, S. (2017). Corruption, Democracy and Economic Growth: Does Conditionality Matter? Pakistan Economic and Social Review, 55, 99-117.
Holtz-Eakin, D., Newey, W., & Rosen, H. (1990). Estimating Vector Autoregressions with Panel Data. Econometrica, 56, 1371-1395. https://doi.org/10.2307/1913103
Huntington, S. P. (1968). Political Order in Changing Societies (p. 448). Yale University Press.
International Monetary Fund (IMF). (2021). World Economic Outlook: Managing Divergent Recoveries. Washington, DC. https://www.imf.org/en/Publications/WEO/Issues/2021/03/23/world-economic-outlook-april-2021
Kaufman, D., & Wei, S.-J. (2000). Does ‘Grease Money’ Speed up the Wheels of Commerce? Working Paper WP/00/64, International Monetary Fund. https://doi.org/10.5089/9781451848557.001
Kaufmann, D., & Wei, S.-J. (1999). Does “Grease Money” Speed Up the Wheels of Commerce? Working Paper No. w7093, National Bureau of Economic Research (NBER). https://doi.org/10.3386/w7093
Kaufmann, D., Kraay, A., & Mastruzzi, M. (2010). The Worldwide Governance Indicators: Methodology and Analytical Issues. Working Paper No. 5430, World Bank Policy Research.
Kurer, O. (1993). Clientelism, Corruption and the Allocation of Resources. Public Choice, 77, 259-273. https://doi.org/10.1007/BF01047869
LaFree, G. & Morris. N. (2004). Corruption as a Global Social Problem. In G. Ritzer & T. Oaks (Eds.), Handbook of Social Problems: A Comparative International Perspective (pp. 600-618). Sage Publications. https://doi.org/10.4135/9781412973526.n34
Leff, N. H. (1964). Economic Development through Bureaucratic Corruption. The American Behavioral Scientist, 8, 8-14. https://doi.org/10.1177%2F000276426400800303
Leys, C. (1965). What Is the Problem about Corruption? Journal of Modern African Studies, 3, 215-230. https://doi.org/10.1017/S0022278X00023636
Lucas, R. E. (1988) On the Mechanics of Economic Development. Journal of Monetary Economics, 22, 3-42. https://doi.org/10.1016/0304-3932(88)90168-7
Mauro, P. (1995). Corruption and Growth. The Quarterly Journal of Economics, 110, 681-712. https://doi.org/10.2307/2946696
Mauro, P. (1998). Corruption and the Composition of Government Expenditure. Journal of Public Economics, 69, 263-279. https://doi.org/10.1016/S0047-2727(98)00025-5
Méon, P.-G., & Sekkat, K. (2005). Does Corruption Grease or Sand the Wheels of Growth? Public Choice, 122, 69-97. https://doi.org/10.1007/s11127-005-3988-0
Mo, P. H. (2001). Corruption and Economic Growth. Journal of Comparative Economics, 29, 66-79. https://doi.org/10.1006/jcec.2000.1703
North, D. (1990). Institutions, Institutional Change, and Economic Performance. Cambridge University Press. https://doi.org/10.1017/CBO9780511808678
Ondo, A. (2017). Corruption and Economic growth: the case of CEMAC. Theoritical Economics Letters, 7, 1292-1305. https://doi.org/10.4236/tel.2017.75088
Otusanya, O. J. (2011). Corruption as an Obstacle to Development in Developing Countries: A Review of Literature. Journal of Money Laundering Control, 14, 387-422. https://doi.org/10.1108/13685201111173857
Przeworski, A., & Limongi, F. (1993). Political Regimes and Economic Growth. Journal of Economic Perspectives, 7, 51-69. https://doi.org/10.1257/jep.7.3.51
Qauh, D. T. (1996). Empirics for Economic Growth and Convergence. European Economic Review, 40, 1353-1375. https://doi.org/10.1016/0014-2921(95)00051-8
Rose-Ackerman, R. (1997). The Political Economy of Corruption. In D. K. A. Elliott (Ed.), Corruption and the Global Economy (pp. 31-60). Institute for International Economics.
Saha, S., Gounder, R., & Campbell, N. (2014). Democracy and Corruption: A Complex Relationship. Crime, Law and Social Change, 61, 287-308. https://doi.org/10.1007/s10611-013-9506-2
Schleifer, A., & Vishny, R. W. (1993). Corruption. The Quarterly Journal of Economics, 108, 599-617. https://doi.org/10.2307/2118402
Seka, (2013). Corruption, Growth and Human Capital: What Relationships? Africa and Development, 38, 133-150.
Shera, A., Dosti, B., & Grabova, P. (2014). Corruption Impact on Economic Grouwth: An Empirical Analysis. Journal of Economic Development, Management, It, Finance and Marketing, 6, 57-77.
Solow, R. M. (1956). A Contribution to the Theory of Economic Growth. The Quarterly Journal of Economics, 70, 65-94. https://doi.org/10.2307/1884513
Tanzi, V., & Davoodi, H. R. (2002). Corruption, Public Investment, and Growth. In G. T. Abed, & S. Gupta (Eds.), Governance, Corruption, and Economic Performance (pp. 280-299).
United Nations (2021). World Economic Situation and Prospects as of Mid-2021. Department of Economic and Social Affairs, United Nations. https://www.un.org/
Wittman, D. (1989). Why Democracies Produce Efficient Results? Journal of Political Economy, 97, 1395-1424. https://doi.org/10.1086/261660
World Development Indicators (WDI) (2020). DataBank. https://databank.worldbank.org/source/world-development-indicators