The Determinants of Corruption: Cross‐Country‐Panel‐Data Analysis

This study explores the determinants of corruption, utilizing the Hausman and Taylor's technique to estimate a random effects model that incorporates both the effects of corruption determinants that vary over time and those that are time-invariant, and using a larger panel dataset and a comprehensive set of corruption determinants. The first interesting result is that perception of strong support for rule of law is strongly correlated with reduced corruption, suggesting that a better quality of law enforcement reduces corruption. Rich countries have lower corruption, and the perception of free expression and accountability strongly decreases corruption, indicating that providing greater opportunities for citizens to participate in selecting their government, more freedom of expression, and free media are effective ways of curbing corruption. Conversely, natural resource abundance, country population size, country's dominant religious tradition, ethnic fractionalization, and political stability are unimportant determinants of corruption, while previous research has suggested they are important.

[1]  P. Mauro.  Corruption and Growth , 1995 .

[2]  Aart Kraay,et al.  Governance Matters VIII: Aggregate and Individual Governance Indicators, 1996-2008 , 2006 .

[3]  Stephen F. Knack,et al.  Gender and Corruption , 1999 .

[4]  Jagdish N. Bhagwati,et al.  Directly Unproductive, Profit-Seeking (DUP) Activities , 1982, Journal of Political Economy.

[5]  James D. Fearon,et al.  Explaining Interethnic Cooperation , 1996, American Political Science Review.

[6]  J. Hausman.  Specification tests in econometrics , 1978 .

[7]  R. Gerlagh,et al.  Causes of corruption: a survey of cross-country analyses and extended results , 2008 .

[8]  Jens Weidmann,et al.  Does mother nature corrupt , 1999 .

[9]  Florencio Lopez-de-Silanes,et al.  The quality of government , 1999 .

[10]  A. Lindbeck.  Swedish Lessons for Post-Socialist Countries , 1998 .

[11]  Carlos A. Leite,et al.  Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth , 1999 .

[12]  Arvind K. Jain,et al.  Corruption: A Review , 2001 .

[13]  Stephen F. Knack,et al.  Are Larger Countries Really More Corrupt? , 1999 .

[14]  Danila Serra,et al.  Empirical determinants of corruption: A sensitivity analysis , 2004 .

[15]  Johann Graf Lambsdorff,et al.  Causes and Consequences of Corruption: What Do We Know from a Cross-Section of Countries? , 2006 .

[16]  Stephen F. Knack,et al.  Trade intensity, country size and corruption , 2003 .

[17]  Raymond J. Fisman,et al.  Decentralization and Corruption: Evidence Across Countries , 2000 .

[18]  Tomson Ogwang,et al.  A Conceptual Framework for Constructing a Corruption Diffusion Index , 2014 .

[19]  Daniel Treisman,et al.  The causes of corruption: a cross-national study , 2000 .

[20]  D. Lederman,et al.  Accountability and Corruption: Political Institutions Matter , 2001 .

[21]  Andrei Shleifer,et al.  Trust in Large Organizations , 1996 .

[22]  Jerry A. Hausman,et al.  Panel Data and Unobservable Individual Effects , 1981 .

[23]  P. Mauro.  The Effects of Corruption on Growth, Investment, and Government Expenditure , 1996, SSRN Electronic Journal.

[24]  Toke S. Aidt,et al.  Economic Analysis of Corruption: A Survey , 2003 .

[25]  Gunnar Myrdal.  Asian drama; an inquiry into the poverty of nations , 1968 .

[26]  Rafael Di Tella,et al.  Rents, Competition, and Corruption , 1999 .

[27]  V. Tanzi.  Corruption Around the World: Causes, Consequences, Scope, and Cures , 1998, SSRN Electronic Journal.

[28]  S. Huntington.  Political Order in Changing Societies , 1969 .

[29]  S. Wei.  Corruption in Economic Development: Beneficial Grease, Minor Annoyance, or Major Obstacle? , 1999 .

[30]  C. V. Rijckeghem,et al.  Corruption and the Rate of Temptation: Do Low Wages in the Civil Service Cause Corruption? , 1997 .