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Does corruption adversely affect economic growth in Tunisia? ARDL approach

Anas Al Qudah (Department of Finance and Banking, Yarmouk University, Irbid, Jordan)
Azzouz Zouaoui (Department of Finance, King Saud University, Riyadh, Saudi Arabia)
Mostafa E. Aboelsoud (Department of Economics, Faculty of Commerce, Suez Canal University, Ismailia, Egypt and Department of Economics, Faculty of Business Administration, Economics and Political Science, The British University in Egypt, Cairo, Egypt)

Journal of Money Laundering Control

ISSN: 1368-5201

Article publication date: 20 January 2020

Issue publication date: 27 January 2020

640

Abstract

Purpose

This study aims to better understand the phenomenon of corruption in Tunisia in relation to its impact on economic development. The period of study is 1995 to 2014. The auto-regressive distributed lag (ARDL) model is adopted to examine the existence of a long-term relationship between the above-mentioned variables and also the direct and indirect consequences of corruption on economic development in Tunisia.

Design/methodology/approach

The study uses a modern econometric technique to estimating the long-term relationship (e.g. the co-integration) between corruption and economic development; using this technique also allows us to investigate the impact of corruption on economic growth.

Findings

The empirical results show that corruption has a negative effect on per capita gross domestic product (GDP) in Tunisia for the period under review. This effect is described as a direct effect of corruption in the long term; specifically, declines are observed in per capita GDP, over the long run, by almost 1 per cent, following a 1 per cent increase in the level of corruption. The results also show that corruption has indirect effects via transmission channels, such as investment in physical capital, which is positively significant in the presence of corruption. The same observation is made at the level of government expenditure during the previous year, while for those of the current year, the coefficient becomes negative but not significant. With respect to human capital, the impact of corruption on education expenditures is insignificant.

Originality/value

The paper begins with an overview of previous literature in this area. Given the nature of corruption and the differences in the meanings attributed to it, from one country to another and from one culture to another, the paper moves on to study the impact of corruption in Tunisia as a case study for one country with one socio-cultural environment. The authors then propose several methods and possible solutions, which could be implemented to deal with this problem.

Keywords

Citation

Al Qudah, A., Zouaoui, A. and Aboelsoud, M.E. (2020), "Does corruption adversely affect economic growth in Tunisia? ARDL approach", Journal of Money Laundering Control, Vol. 23 No. 1, pp. 38-54. https://doi.org/10.1108/JMLC-12-2018-0076

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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