Effect of Corruption on Economic Growth in Eastern Africa: Disaggregated Approach

International Journal of Research and Innovation in Applied Science (IJRIAS) | Volume VI, Issue IV, April 2021|ISSN 2454-6194

Effect of Corruption on Economic Growth in Eastern Africa: Disaggregated Approach

Wycliffe Mugun
Department of Economics Kaimosi Friends University College, Kenya

Abstract-High corruption phenomenon is a common problem faced by several developing countries. Weak bureaucracy, weak law, and justice enforcement are assumed to be the causes of corruption. However, the available studies majority are of single countries that has focused mainly on the relationship between overall corruption and economic growth and failing to provide the specific relationship between corruption and economic growth in Eastern African countries. The main objective of this study was to investigate the effect of corruption on economic growth in Eastern Africa. This study was modeled using Public choice theory and corruption. Hausman Specification tests was conducted to assess whether to use the fixed effects or random effect panel estimation. the random effect model results showed that corruption had a negative and statistically significant relationship with economic growth, fixed effect model results on public resource equity had a negative and a statistically insignificant relationship with economic growth whereas the random effect model results on public sector management had a negative and statistically significant relationship with economic growth. The study concluded that Corruption decreases the growth rate of per capita income directly by decreasing the productivity of existing resources and indirectly through reduced investments and also discourages investment savings and culture of hard work among the Eastern African countries. The study recommended that there should be formulation of policies in Eastern Africa that aims to help and improve the quality of the public sector management and minimize corruption activities in the public sectors.

Key Words: Corruption, public sector resource equity, public sector management, Economic growth, Kenya

1.0 INTRODUCTION

Corruption is attracting a lot of attention all around the world and more so in Africa. In June 2007, the OECD, European Union especially the European Council, the United Nations and many others realized the danger of corruption on societies. And of course, corruption has different forms and dimensions which threatened societies and governments to their way of development. (European Union, 2007). Abdukadir (2018) defines “corruption- as illegal behavior (misused power) especially by people in official positions, or any person related to responsibility

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