Skip to main content

Advertisement

SpringerLink
Log in

Competitiveness, corruption, and income inequalities: approaching the ‘Janus’ face of development with simultaneous equation modelling

  • Published:
Quality & Quantity Aims and scope Submit manuscript

Abstract

The present study illustrates the outcomes of a simultaneous equation modelling that investigates the relationship between competitiveness and corruption both directly and indirectly, considering the interlinkages with the broader social structure in a sample of 110 world countries. The empirical results justify a separate analysis of the sample according with the level of human development, and outline the importance of existing income inequalities in addition to economic and social development. In high human development countries, the net effect of competitiveness on corruption is greater than its direct effect due to the indirect (positive) correlation of competitiveness with income inequality. On the contrary, in low human development countries, the final effect of competitiveness on corruption is lower than its direct effects and, therefore, the ensuing improvement on the level of corruption is reduced substantially. This finding may be ascribed to the indirect negative effect stemming from income inequalities, which exacerbate social turbulence and collisions whereas they impinge on social cohesion and institutional resilience. These issues, which are particularly intense under low social development conditions, reduce the direct, non-linear effect of competitiveness on corruption, suggesting the importance of indirect effects.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Source: our elaboration on (i) http://www.transparency.org/cpi2010/in_detail and (ii)

Fig. 2

Source: our elaboration on (i) http://www.transparency.org/cpi2010/in_detail, (ii) , (iii)

Similar content being viewed by others

References

  • Acemoglu, D., Verdier, T.: The choice between market failures and corruption. Am. Econ. Rev. 90, 194–211 (2008)

    Article  Google Scholar 

  • Adams, S., Klobodu, E.K.M.: Financial development, control of corruption and income inequality. Int. Rev. Appl. Econ. 30(6), 790–808 (2016)

    Article  Google Scholar 

  • Ades, A., Di Tella, T.: Rents, competition, and corruption. Am. Econ. Rev. 89, 982–994 (1999)

    Article  Google Scholar 

  • Alesina, A., La Ferrara, E.: Who trusts others? J. Public Econ. 85, 207–234 (2002)

    Article  Google Scholar 

  • Amendola, A., Easaw, J., Savoia, A.: Inequality in developing economies: the role of institutional development. Public Choice 155, 43–60 (2013)

    Article  Google Scholar 

  • Angrist, J., Krueger, A.: Instrumental variables and the search for identification: from supply and demand to natural experiments. JEP 15, 69–85 (2001)

    Article  Google Scholar 

  • Angrist, J.D., Imbens, G.W., Rubin, D.B.: Identification of causal effects using instrumental variables. J Am Stat Assoc 91, 444–455 (1996)

    Article  Google Scholar 

  • Baltagi, B.H.: Econometrics. Springer, Berlin (2008)

    Google Scholar 

  • Birdsall, N., Ross, D., Sabot, R.: Inequality and growth reconsidered: lessons from East Asia. World Bank Econ. Rev. 9, 477–508 (1995)

    Article  Google Scholar 

  • Bliss, C., Di Tella, R.: Does competition kill corruption? J. Polit. Econ. 105(5), 1001–1023 (1997)

    Article  Google Scholar 

  • Bound, J., Jaeger, D., Baker, R.: Problems with instrumental variables estimation when the correlation between the instruments and the endogeneous explanatory variable is weak. J. Am. Stat. Assoc. 90, 443–450 (1995)

    Google Scholar 

  • Bourguignon, J., Morrison, S.: Inequality among world citizens: 1820–1992. Am. Econ. Rev. 92, 727–744 (2002)

    Article  Google Scholar 

  • Ciommi, M., Chelli, F.M., Salvati, L.: Integrating parametric and non-parametric multivariate analysis of urban growth and commuting patterns in a European metropolitan area. Qual. Quant. 53, 957–979 (2019)

    Article  Google Scholar 

  • Easterly, W., Ritzen, J., Woolcock, M.: Social cohesion, institutions and growth. Econ. Politics 18, 103–120 (2006)

    Article  Google Scholar 

  • Emerson, P.: Corruption, competition and democracy. J. Dev. Econ. 81, 193–212 (2006)

    Article  Google Scholar 

  • Esposito, P., Patriarca, F., Salvati, L.: Tertiarization and land use change: the case of Italy. Econ. Model. 71, 80–86 (2018)

    Article  Google Scholar 

  • Gyimah-Brempong, K.: Corruption, economic growth, and income inequality in Africa. Econ. Gov. 3, 183–209 (2002)

    Article  Google Scholar 

  • Goldberger, A.S.: Structural equation methods in the social sciences. Econometrica 40, 979–1001 (1972)

    Article  Google Scholar 

  • Gupta, S., Davoodi, H., Alonso-Terme, R.: Does corruption affect income inequality and poverty? Econ Gov. 3, 22–45 (2002)

    Article  Google Scholar 

  • Harms, P., Ursprung, H.: Do civil and political repression really boost foreign direct investments? Econ. Inq. 40, 651–663 (2002)

    Article  Google Scholar 

  • Husted, B.W.: Wealth, culture and corruption. J. Int. Bus Stud. 30, 339–360 (1999)

    Article  Google Scholar 

  • Isaksson, A.-S.: Social divisions and institutions: Assessing institutional parameter variation. Public Choice 147, 331–357 (2011)

    Article  Google Scholar 

  • Jain, A.K.: Corruption: a review. J. Econ. Surv. 15, 71–121 (2001)

    Article  Google Scholar 

  • Johnston, M.: Corruption, inequality and change. In: Ward, P.M. (ed.) Corruption, Development and Inequality: Soft Touch or Hard Graff, pp. 37–44. Routledge, London (1989)

    Google Scholar 

  • Jong-Sung, Y., Khagram, S.: A comparative study of inequality and corruption. Am. Sociol. Rev. 70(1), 136–157 (2005)

    Article  Google Scholar 

  • Keefer, P., Knack, S.: Why don’t poor countries catch up? A cross-national test of an institutional explanation. Econ. Inq. 35, 590–602 (1997)

    Article  Google Scholar 

  • Lamonica, G.R., Recchioni, M.C., Chelli, F.M., Salvati, L.: The efficiency of the cross-entropy method when estimating the technical coefficients of input–output tables. Spat. Econ. Anal. 15(1), 62–91 (2020)

    Article  Google Scholar 

  • La Porta, R., Lopez-De-Silanes, F., Shleifer, A., Vishny, R.: The quality of government. J Law Econ Organ 15, 222–279 (1999)

    Article  Google Scholar 

  • Mauro, P.: Corruption and growth. Q. J. Econ. 110, 681–712 (1995)

    Article  Google Scholar 

  • Méon, P.-G., Weill, L.: Is corruption an efficient grease? World Dev. 38, 244–259 (2010)

    Article  Google Scholar 

  • Mo, P.H.: Corruption and economic growth. J. Comp. Econ. 29, 66–79 (2001)

    Article  Google Scholar 

  • Paldam, M.: The cross-country pattern of corruption: economics, culture and the seesaw dynamics. Eur J Polit Econ. 18, 215–240 (2002)

    Article  Google Scholar 

  • Policardo, L., Carrera, E.J.S., Risso, W.A.: Causality between income inequality and corruption in OECD countries. World Development Perspectives 14, 100102 (2019)

    Article  Google Scholar 

  • Rodrik, D.: Where did all the growth go? External shocks, social conflict and growth collapses. J Econ Growth. 4, 385–412 (1999)

    Article  Google Scholar 

  • Rontos, K., Vavouras, I., Ciommi, M.T., Salvati, L.: Two faces of the same coin? A comparative, global approach to corruption and socioeconomic development. Qual Quant 53, 1875–1894 (2019)

    Article  Google Scholar 

  • Rose-Ackerman, S.: Corruption and government: causes, consequences and reform. Cambridge University Press, Cambridge (1999)

    Book  Google Scholar 

  • Salvati, L., Serra, P.: Estimating rapidity of change in complex urban systems: a multidimensional, local-scale approach. Geogr. Anal. 48(2), 132–156 (2016)

    Article  Google Scholar 

  • Savoia, A., Easaw, J., McKay, A.: Inequality, democracy, and institutions: a critical review of recent research. World Dev. 38, 142–154 (2010)

    Article  Google Scholar 

  • Solt, F.: Standardizing the world income inequality database. Soc. Sci. Q. 90, 231–242 (2009)

    Article  Google Scholar 

  • Theil, H.: Repeated Least Squares Applied to Complete Equation Systems. Central Planning Bureau, The Hague (1953)

    Google Scholar 

  • Treisman, D.: The causes of corruption: a cross-national study. J. Public Econ. 76, 399–457 (2000)

    Article  Google Scholar 

  • Troisi, R., Nese, A., Blanco-Gregory, R., Giovanniello, M.A.: The effects of corruption and innovation on sustainability: a firm-level analysis. Sustainability. 15, 1848 (2023). https://doi.org/10.3390/su15031848

    Article  Google Scholar 

  • Uberti, L.: Corruption and growth: Historical evidence, 1790–2010. J. Comp. Econ. 50, 321–349 (2022)

    Article  Google Scholar 

  • Ulman, S.-R.: Corruption and national competitiveness in different stages of country development. Procedia Econ. Finance 6, 150–160 (2013)

    Article  Google Scholar 

  • Wooldridge, J.M.: Introductory Econometrics: A Modern Approach. Cengage Learning, South-Western, Australia (2013)

    Google Scholar 

  • World Bank: Sub-Saharan Africa: From crisis to sustainable growth. The World Bank, Washington, D.C. (1989)

    Google Scholar 

  • Zak, P., Knack, S.: Trust and growth. Econ. J. 111, 295–321 (2001)

    Article  Google Scholar 

  • Aidt, T.S.: Corruption and sustainable development. Cambridge Working Papers in Economics 1061, Faculty of Economics, University of Cambridge (2011a)

  • Aidt, T.S.: The causes of corruption", CESifo DICE Report. 9, 15-19 (2011b)

  • Badinger, H., Nindl, E.: Globalization, inequality and corruption. WU Working Paper, 139 (2012)

  • Bilbao-Osorio, B., Blanke, J., Crotti, R., Drzeniek-Hanouz, M., Fidanza, B., Geiger, T., Ko, C., Serin C.: Assessing the sustainable competitiveness of nations. In: The Global Competitiveness Report 2012–2013, pp. 45–48. The World Economic Forum (2012)

  • Delgado, M., Ketels, C., Porter, M., Stern, S.: The determinants of national competitiveness. NBER Working Paper. No. 18249, Cambridge, MA (2012)

  • Gwartney, J., Hall, J., Lawson, R.: Economic freedom of the world: 2010 Annual report. The Fraser Institute (2010)

  • Herzer, D., Nunnenkamp, P: The effect of foreign aid on income inequality: evidence from panel cointegration. Kiel Working Paper. 1762, 28–32 (2012)

  • Kaufmann, D., Kraay, A., Mastruzzi, M.: The worldwide governance indicators: Methodology and analytical issues. Policy Research Working Paper. 5430, The World Bank (2010)

  • Lambsdorff, J.G.: Corruption in empirical research: a review. In: 9th international anti-corruption conference, Durban, South Africa (1999)

  • Lopez, H., Guillermo, P.: Inequality in Latin america: determinants and consequences. Policy Research Working Paper. 4504, The World Bank (2008)

  • Lopez-Claros, A.: Executive summary. In: The World Economic Forum. The Global Competitiveness Report 2005–2006, pp 82–95 (2005)

  • Sala-i-Martin, X., Blanke, J., Drzeniek-Hanouz, M., Geiger, T., Mia, I.: The global competitiveness index 2010–2011: Looking beyond the global economic crisis. In: The Global Competitiveness Report 2010–2011. The World Economic Forum (2010)

  • Transparency International: Corruption Perceptions Index 2010. Berlin (2010)

  • United Nations Development Programme: Human Development Report 2010: The real wealth of nations—pathways to human development (2010)

  • Uslaner, E.M.: Corruption and inequality. CESifo DICE Report. 9, 20-24 (2011)

  • You, J.-S., Khagram, S.: Inequality and corruption. Working Paper RWP04-001. Kennedy School of Government, Harvard University, Cambridge MA. (2004)

Download references

Acknowledgements

Not applicable—no acknowledgements to declare.

Funding

Not applicable.

Author information

Authors and Affiliations

  1. Department of Sociology, University of the Aegean, Mitilini, Greece

    Kostas Rontos & Maria-Eleni Syrmali

  2. Department of Methods and Models for Economics, Territory and Finance, Faculty of Economics, Sapienza University of Rome, Rome, Italy

    Luca Salvati

  3. Department of Public Administration, Panteion University of Social and Political Sciences, Athens, Greece

    Ioannis Vavouras

Authors
  1. Kostas Rontos
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Maria-Eleni Syrmali
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Luca Salvati
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Ioannis Vavouras
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Luca Salvati.

Ethics declarations

Conflict of interest

The nothing to declare.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Rontos, K., Syrmali, ME., Salvati, L. et al. Competitiveness, corruption, and income inequalities: approaching the ‘Janus’ face of development with simultaneous equation modelling. Qual Quant 58, 343–364 (2024). https://doi.org/10.1007/s11135-023-01644-5

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11135-023-01644-5

Keywords

Search

Navigation