Determinants of Corruption and its Relation to GDP: (A Panel study)

Abstract

This paper investigates the determinants of corruption, and highlights its relation to the growth. The corruption index is taken from Transparency International. We used the more recent data set from 1995 to 2005. First part of the study is based on determinants of corruption. The empirical results indicate that real GDP per capita, secondary school enrolment, public spending on education, FDI, and unemployment rate are important determinants of corruption. Through combination of these variables we can change the level of corruption. Second part of the study is based on the relationship between corruption and level of GDP per capita and growth of GDP in Barro regression. The results indicate that corruption is more relevant to level of GDP per capita.