The Effect of Corruption on Economic Growth: Empirical Evidence in East Africa.

International Journal of Research and Innovation in Social Science (IJRISS) | Volume V, Issue VI, June 2021 | ISSN 2454–6186

The Effect of Corruption on Economic Growth: Empirical Evidence in East Africa.

Abdikarim Bashir Jama
Universiti Utara Malaysia

Abstract: This paper analyzes the influence of corruption and other explanatory variables on the economic growth of East African countries over the period from 2013 to 2017. The study uses a panel data technique. Our empirical results found a negative effect of corruption on economic development. This gravitates to backing the “sand the wheels” hypothesis and controverts the “grease the wheels” proposition which suggests the possibility of corruption compensating the bad governance. Likewise, findings are obtained from the regulatory quality variable. However, regarding the other explanatory variables, the imported variable is statistically significant and has a positive effect on the economic growth of East African countries. While export and foreign direct investments are insignificant. Although various studies investigate the link between corruption and economic output very few studies focus on the East African region, therefore the result of this study is expected to offer robust evidence on policymakers, governments, and scholars.

Keywords: Control of Corruption, Regulatory Quality, FDI, Trade Openness, Economic Growth, Panel Date Technique

I. INTRODUCTION

The detrimental impacts of bribery on development, income, and progress across countries have elevated disquiets amid the over-all public, investigators, and legislators. Corruption is extensively regarded as one of the severe impediments to progress, expansion, and welfare of the state. It inspires rent-seeking comportment and a system of intractable enticements between administration officials. Its impacts on public rearrangement programmers are grave, misleading the market situations (Rose-Ackerman, 2004; Shleifer & Vishny, 1993). Furthermore, Bribery made itself noticeable when the institute of the government was instituted due to the behavior of individuals to engage or designate to govern the regime institutes (Anyanwu, 2002; Idomeh, 2006). Sedigh and Ruzindana (1999) see bribery in Africa as a problem of monotonous aberration from reasonable criteria and standards by public bureaucrats and parties with whom they interrelate. Not only that,

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