The European Physical Journal B

, Volume 63, Issue 4, pp 547–550

Influence of corruption on economic growth rate and foreign investment

  • Boris Podobnik
  • Jia Shao
  • Djuro Njavro
  • Plamen Ch. Ivanov
  • H. E. Stanley
Article

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.

PACS

89.90.+n Other topics in areas of applied and interdisciplinary physics 

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Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  • Boris Podobnik
    • 1
    • 2
    • 3
  • Jia Shao
    • 3
  • Djuro Njavro
    • 2
  • Plamen Ch. Ivanov
    • 3
    • 4
  • H. E. Stanley
    • 3
  1. 1.Department of Physics, Faculty of Civil EngineeringUniversity of RijekaRijekaCroatia
  2. 2.Zagreb School of Economics and ManagementZagrebCroatia
  3. 3.Center for Polymer Studies and Department of PhysicsBoston UniversityBostonUSA
  4. 4.Institute of Solid State PhysicsBulgarian Academy of SciencesSofiaBulgaria

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