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Influence of corruption on economic growth rate and foreign investment

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Abstract

We analyze the dependence of the Gross Domestic Product (GDP) per capita growth rates on changes in the Corruption Perceptions Index (CPI). For the period 1999–2004 for all countries in the world, we find on average that an increase of CPI by one unit leads to an increase of the annual GDP per capita growth rate by 1.7%. By regressing only the European countries with transition economies, we find that an increase of CPI by one unit generates an increase of the annual GDP per capita growth rate by 2.4%. We also analyze the relation between foreign direct investments received by different countries and CPI, and we find a statistically significant power-law functional dependence between foreign direct investment per capita and the country corruption level measured by the CPI. We introduce a new measure to quantify the relative corruption between countries based on their respective wealth as measured by GDP per capita.

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Authors and Affiliations

  1. Department of Physics, Faculty of Civil Engineering, University of Rijeka, Rijeka, Croatia

    Boris Podobnik

  2. Zagreb School of Economics and Management, Zagreb, Croatia

    Boris Podobnik & Djuro Njavro

  3. Center for Polymer Studies and Department of Physics, Boston University, Boston, 02215, USA

    Boris Podobnik, Jia Shao, Plamen Ch. Ivanov & H. E. Stanley

  4. Institute of Solid State Physics, Bulgarian Academy of Sciences, 1784, Sofia, Bulgaria

    Plamen Ch. Ivanov

Authors
  1. Boris Podobnik
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  2. Jia Shao
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  3. Djuro Njavro
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  4. Plamen Ch. Ivanov
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  5. H. E. Stanley
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Corresponding author

Correspondence to Boris Podobnik.

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Podobnik, B., Shao, J., Njavro, D. et al. Influence of corruption on economic growth rate and foreign investment. Eur. Phys. J. B 63, 547–550 (2008). https://doi.org/10.1140/epjb/e2008-00210-2

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  • DOI: https://doi.org/10.1140/epjb/e2008-00210-2

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