The effect of corruption on economic growth in Southeast Asia countries

Abstract

Many theoretical and empirical studies suggest that economic growth depends on various factors such as physical capital, human capital, openness to trade, macroeconomic conditions, corruption perceptions, education, and population growth. This study focuses on summarizing these studies and examining the total impact of corruption on economic growth. Based on panel data included thirty Asian countries over the observation period 1996-2014, this paper applies both ordinary least square (OLS) technique and three-stages least square (3SLS) technique to determine how corruption impacts on economic growth directly and indirectly through five possible transmission channels: investment, human capital, political instability, government expenditure, and the openness of international trade. In consistency with findings of the previous empirical researches, this paper concludes that the effect of corruption on the economic development of thirty Asian countries is significantly negative.