I found that for economies with low corruption control index and low economic growth, impact is positive and huge if just increase the level of corruption control. But, for economies with low corruption control and high economic growth the impact is negative. Is there a logical answer for that?
Dear Shalabi,
you can see my paper : At what level of corruption does economic growth decrease?
I used corrcon from germany and applied it to OLS equation for Brazil and Nigeria .results showed a big jumb in GDP percapita growth ,but when i did the same on Egypt and China, predicted growth decreased
true growth from 75 to 2009 was
Brazil 1.03 predicted showed 2.86
Nigeria increased from 0.42 to about 2.1
while Egypt decreased from 4 to 3.5
China decreased from 7.6 to 4.88
all 4 countries had a low corrcon level and all negative signs.
Dear Mohamed Ali Trabelsi
your paper is strait up to the point and would be a great guide to my research.
thanks and best regards
Yasser Shalabi
If his paper (Mohamed Ali Trabelsi) would be a great guide, then the appropriate thing is to recommend him
Yes, we live in a jungle where the big fish swallows the little one all the time.
As money increases corruption also increases . In politics it is mostly found .
Dear Cornel:
You´re right, that´s why economic growth only it only benefits a sector of the population.
Interesting question and contribution from colleagues.
Following
Dear Yasser Shalabi :
You need to clarify the causality, who influences who, controlling corruption means that there is little corruption, and therefore economic logic suggests that if corruption is low (control of corruption high ) it means that growth in per capita income is positive , and vice versa.
Acually I did.
I had to questions
1 ) I had corrcon as independent variable among other variables and GDP per capita growth as independent variable.
2) I had GDP per capita growth as independent variable among some other variables and corrcon as the dependent variable
after clearing equations from correlation and multicolinearity.
I reached this conclusion.
I supported that with theoratically by using literature reviews,and a case study buy studieng economy in both Germany and South Korea.
I will download my work very soon I.S.A. as soon as I am done with some final touches.
thanks again.
That is meaning you use 2SLS, I think you are right. good work and good luck.
The fight against corruption, through mechanisms of accountability and citizen participation, and the promotion of public servant accountability and ethics
It is assumed that with the implementation of measures to prevent and combat corruption, in terms of economic resources will be able to invest more and with better results.
@Narat and Yesser
I do not think there is any journal that will accept 2SLS in the face of system approach and VECM and VAR models.
This study is really a very simple study that involves time series properties properties analysis. FMOLS and Granger causality. Within the FMOLS or ARDL you are controlling for endogeneity and residual autocorrelation. If you are interested I will write more. if non-linearity is inferred line 2 of my comments is adequate.
Everything is logical. A low corruption control index is often fostered by lower economic growth. Corruption does not need real economic growth, because this leads to the growth of economically effective competitive segments of the national economy, which do not need corruption schemes. If economic growth is observed, then competitive segments of the economy exist and develop, not cloned to support corruption schemes. If at the same time you increase the control powers of the state, including in the sphere of corruption control, you will divert the resources of effective business to non-operating operations, and thereby slow down economic growth. And business in these conditions will begin to show a tendency to corruption, thus striving to reduce the real costs of control procedures.
Corruption is considered a strong constraint on economic growth, is mention as a common practice in the Public Sector. It has effects: inefficient provision of public services, public finances, public investment (briberies).
I have an appendix on my paper about the ways and Sectors that corruption plays a big role in it.the largest sector I found to have a great deal of corruption was the arm force sector.altough it is the largest part but, it is not as wide spread as other sectors an usually it is concentated to the ruling hands so it is more likely to be considered as " keloptocracy" more than any thing else.
I used a very basic and simple econometric tool( ordinary least square method,OLS),with a linear regression for 2 questions I had
1) GDPper capita growth as dependent variable
2) Corruption control index as the dependent variable
the empirics were one part of 3 parts I worked at in my paper.
@ Chuck A Arize
" Government corruption is more prevalent in poor countries than in rich countries".
Does Economic Growth Reduce Corruption? Theory and Evidence from VietnamJie Bai, Seema Jayachandran, Edmund J. Malesky, and Benjamin A. OlkenNBER Working Paper No. 19483 .
Odebrecht ( Latin America's construction giant ), is a case of corruption in public works in many Latin American countries.
Yasser Shalabi
Sorry yesterday was like hell with trees falling on homes and power lines but we are okay!
What is your problem with running Ols. What you are doing is so simple. Describe your data or send your results and we can help you. You seem not to be communicating effectively. All I know is that you have Real output growth and corruption index. Therefore, you have time series. Be more transparent otherwise you are wasting time.
Dr. Chuck A A Arize:
Although I do not know you, nor even the scholar Yasser, I only felt yesterday from your message to him that you are tired. Today, you have proven that you are really a highly moral and knowledgeable scholar, you do not hesitate to offer advice and help to others like Yasser.
To Dr. Nazar Alqahwachi
Oh, I love to help. people . Yesterday, we had tornadoes, lightening, hale damages and scary rain.Houses were destroyed and power lines (I have not checked the number of deaths) destroyed so I wanted him to know what is going on. I was not tired instead I was taking cover and making sure my family was safe.
I truly want to help him just like I have helped numerous people. He can message me so I am trying to get him to be proactive. If you go to my message center you will be shocked at the number I have helped. Allah helps me all the time so am just trying to get him to act so that we can solve his issues.If we see is output then we know what he needs. Right now, none of us has any knowledge of his data. Anyway thank you and I appreciate you. we all are brothers and our job while alife is to help others!
Dr. chuck A Arize:
I hope all people be just like you. You are a brave and great man.
@Chuck A Arize sorry I just got into mssgs now but I thank you Sir.
I hope every thing is ok.I understand how weather can be down in Texas as I drove through Texas few times.the company I used to work for, had a big location in Dallas.
I am done with my Thesis and had passed thanks Allah.eventhough I am trying to improve my work as I am looking forward to extend my research in the same field but with a different consept.
I will mssg you my work so far and thanks again for your generous cooperation.
"Corruptionn has been the focus of business ethicists and international management scholars for years. That should come as no surprise, as paying off corrupt government officials appear to be an inevitable ritual of business leaders operating globally, especially in many developing countries" James Weber
Dear Yassar,
There is no straightforward answer to explain the results of your study perhaps you need to interrogate your data again looking at these economies case by case. Alternatively, you may try to triangulate your results with other evidence about the relationship between corruption and economic growth. We know that there are instances where corruption may boost growth when illicit resources are invested back into the economy disguised in legal activities such as real estates. I'm not condoning corruption but i know it can boost economic activity somewhere.
I note that for your case, high or low economic growth does not necessarily refer to high or low income countries so the argument of high corruption in developing countries and low corruption in developed world will not help. We have low developing countries like Ethiopia and Tanzania that have registered high growth rates of over 10% and actually most developed countries growth oscillates between 2-5%.
My take is that you already know the interpretation of "positive" and "negative" relationships in OLS. Just for emphasis, 'Positive' results imply that both the dependent/explanatory and independent variables move in the same direction. When one increases the other also increases and vice-versa. On the other hand, a "negative" relationship means that the two move in opposite direction. When one goes up the other goes down and vice versa.
Now, back to your challenge, it would be nice to consider the 'rate' of growth of these variables as well. For example 'low corruption control', how much is low, and how has been the trend - the figure might appear low yet it is a great improvement from the base performance thereby indicating higher rate. When the rate is high, it reaches a moment when any addition growth become insignificant and the might might not be seen. Take example of an infection, it spreads faster immediately an epidemic attacks and as more and more people get infected, the rate of new infections slows. In absolute numbers more people will be infested while the rate of infection is falling. If you try to juxtapose this analogy to your results perhaps you would obtain new insights.
Good luck
Thank you for your valuable advice,
on your last paragraph.I will stress more on that although I talked about it on my case study and the exepirement.
thanks again
@John Bosco Kintu Kavuma
In some cases corruption has a big impact on economic growth " we find that a 1% increase in the corruption level reduces the growth rate by about 0.72% or, expressed differently, a one-unit increase in the corruption index reduces the growth rate by 0.545 percentage points" Mo, Pak Hung—Corruption and Economic Growth.
Corruption is a costly phenomenon for Economic Growth, because reduces public and private investment and distorts the allocation of resources.
Corruption is a very important factor that explains the concentration of income.
Certainly, if corruption permeates the joints of government institutions in particular, it will affect the economic aspect of countries in terms of growth and economic development. The government's ability to weaken control, control and accountability. The government's efforts to impose reform measures will be greatly reduced. For any economic steps and programs because they will be linked to the influence of those who have an interest and those who have the power of illegal influence
@Emad Almukhtar!
the real Issue here is if the economy is working and corruption exists,so how much shock would the economy be able to withstand due to the boosting of corruption controle and rule of law factors?
A distinction must be made between large and small corruption. Great corruption must not under any circumstances be tolerated
@cornel lonescu
That is correect and that is what should be ,but in reall cases that is unfortunatly not tha case.
ie, Gemany is very clean when it comees to corruption but as I stated in my paper German Companies are not that clean!
and they prey on weak corrupt unstablr Economies such as African countries"Nigeria, cote de vior,Egypt,...)
even within the EU they did the same with Grees, Portoghal and Spain.
It´s clear that corruption affects economic growth in the short and long run, because government failure in anti-corruption policies.
I would like to ask what is the definition of corruption, which are the parameters you have included in this?
Symela Charalampidou
There is no clear answer regarding the definition of corruption as it varies from country to country or a region to region also from time period to time period. but in my paper I concluded the most common definition which is " acquiring wealth by using power or influence through illegitimate means for private gain or expansion of wealth at the expense of the pubic"
you can check my paper for more detailed answer regarding history and parameters I choose to include in my paper and give me your opinion .
the literature has corruption as helping growth such as bribes to avoid bureaucracy or hampering growth traditionally. so must look more deeper at corruption definition.
Corruption affects economic growth in countries that have fragile government institutions and economic power is part of political power.
Ante la fragilidad o debilidad de las instituciones la corrupción juega un papel mas determinante en mover el aparato gubernamental para todo tipo de trámite...de ahí que la corrupción baja o alta ya está afectando el crecimiento económico......he venido trabajando recientemente como concepto de corrupción....el abandono del deber ser de todo aquel a quien le corresponde cuidar el estado de derecho, para obtener beneficios privados, sea para sí o para terceras personas.
" Some Authors have suggested that corruption might rise economic growth, through two types of mechanisms. First, corrupt practices such as "speed money" would enable individuals to avoid bureaucratic delay. Second, government employees who are allowed to levy bribes would work harder, especially in the case where bribes act as piece rate"(Paolo Mauro, 1995).
yes Paolo Mauro as well as other researchers suggested the same and I cited thier findings in my literature reviews in my thesis.so I did introduce that idea as a part of the study.
The only interpretation that I can realise is that in the second case there is significant correlation between corruption methods and economic growth. Hence the increase in corruption control eliminates somehow the part of growth which depends in corruption.
Dear Colleagues and Friends from RG, An interesting research concept that requires careful verification. Many countries' experience in improving the system of institutional control and combating corruption may have a significant impact on economic growth. In many developing countries, there were situations, e.g. improving the efficiency of the tax system, sealing the tax system, reducing the gray tax zone, and as a result of these activities tax revenues to the state budget increased significantly year by year. At that time, the state could implement more pro-investment projects in the public sector, support private sector companies, and develop social programs for citizens. In this way, economic growth improved significantly in subsequent years. I described the example of developing pro-social programs and their positive impact on economic growth in my publications on Socio-economic Policy Programs, i.e. the Family 500 Plus program and the Flat Plus Program (Mieszkanie Plus Program). The process of digitizing public offices, including the development and implementation of public technologies, Internet technologies, ICT and Industry 4.0 to the public sector offices, helps to seal the tax system, e.g. in terms of VAT collection and the requirement to introduce cash registers for various types of services. In a situation where entrepreneurs all tax and other matters can and / or must be processed through the Internet, this increases the possibility of increasing the efficiency of the tax system, including the automation of control processes. In contrast, in highly developed economies ICT, Internet and Industry 4.0 information technologies are already at a high level of development, so the possible scope for improving the efficiency of the tax system is usually smaller than in developing countries, where these technologies are often at an early stage of development and are only now implemented into public offices. But this is just one of the many elements differentiating developing and highly developed countries in the context of improving the efficiency of the tax system, including sealing the system, reducing the gray tax zone in order to increase tax revenues to the central state budget under the system of state public finances and the budgets of local units local government. In addition, the issue of sealing the tax system should also include an international approach to tax issues. Well, many large enterprises, transnational corporations establish their headquarters in the so-called tax havens, i.e. in countries where taxes are much lower. This problem does not only apply to developing countries but also to developed ones. The development of globally operating corporations should force the unification of tax systems internationally. This happens, for example, in the European Union, in which in this way, from a national perspective, attempts are being made to improve the operation of national tax systems in individual Member States of the European Union. But unfortunately the European Union is only a smaller part of the global economy. Globalization processes have an increasing impact on tax issues analyzed and researched in a supra-national perspective.
Best wishes
Dariusz Prokopowicz
Hello Yaser:
Corruption cases are very common in public investment through bribes,
Odebrecht is an example of it.
That is very much true Martha,
the question is to what level it could be ignored so fighting it won't affect the economic development?
also we should examine the countries that export corrupted companies at the same level we examine the countries with the corrupt government.I had a small part in my thesis about that but I am thinking about expanding the study of that variable in my next research.
The situatios is that Public works contracts with the government ensure "good profits", so private companies give bribes to obtain contracts, is a vicious circle.
Corruption is a complex phenomenon. It affects the public administration and the functioning of the political system, also economic sector. According Niccolò Machiavelli "the greatest threat to the maintaining of an enduring state is corruption".