Corruption, public debt and economic growth – evidence from developing countries
International Journal of Development Issues
ISSN: 1446-8956
Article publication date: 31 July 2020
Issue publication date: 16 March 2021
Abstract
Purpose
The purpose of this paper is to empirically examine the effect of corruption on public debt and economic growth in 20 developing countries over the period 1996-2018.
Design/methodology/approach
This study makes use of the autoregressive distributed lag (ARDL) model to detect the long-term relationships, on the one hand, between corruption and public debt and, on the other hand, between corruption and economic growth.
Findings
The empirical results reveal that corruption increases the debt-to-GDP ratio and that the interactions between corruption and public revenues and between corruption and public spending have a positive influence on public debt in the long run. The estimations also show that high corruption hampers long-term economic growth and increases the negative effect of public debt on economic growth in developing countries.
Originality/value
While corruption is a prevalent phenomenon in most developing countries, the literature still lacks empirical examination of its economic effects. This study fills this gap with the aim of highlighting that high corruption hinders development in developing nations. This study also examines the impact of the interactions between corruption and components of the fiscal balance on public debt. Moreover, while the existing empirical literature uses regression techniques, this paper uses a panel ARDL approach to detect the long-term effects of corruption.
Keywords
Acknowledgements
The author would like to thank and acknowledge the contribution of the anonymous reviewers.
Citation
Ibrahim, C. (2021), "Corruption, public debt and economic growth – evidence from developing countries", International Journal of Development Issues, Vol. 20 No. 1, pp. 24-37. https://doi.org/10.1108/IJDI-12-2019-0208
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited