Influence of corruption on economic growth rate and foreign investment
- 843 Downloads
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.
PACS89.90.+n Other topics in areas of applied and interdisciplinary physics
Unable to display preview. Download preview PDF.
- 1.H. Boch, Regional Brief: available at http://go.worldbank.org/3IGKDWFTG1
- 4.V. Tanzi, H.R. Davoodi, Corruption, Growth, and Public Finance, Working Paper of the International Monetary Fund, Fiscal Affairs Department (2000)Google Scholar
- 6.J.G. Lambsdorf, Corruption in Empirical Research — A review, Transparency International Working Paper, (1999)Google Scholar
- 7.N.H. Leff, American Behavioral Scientists 82, 337 (1964)Google Scholar
- 10.The Corruption Perceptions Index (CPI) is published by Transparency International www.transparency.org
- 11.GDP per capita as current prices in US dollars are provided by the International Monetary Fund, WORLD ECONOMIC OUTLOOK Database, September 2006, www.imf.org/external/pubs/ft/weo/2006
- 12.Foreign Direct Investments data and GDP per capita as constant prices in US dollars are provided by www.earthtrends.wri.com
- 13.Population data are provided by www.earthtrends.wri.com