Corruption and Economic Efficiency: Panel Data Evidence

George Halkos and Nickolaos Tzeremes

Global Economic Review, 2010, vol. 39, issue 4, 441-454

Abstract: This paper investigates empirically the effect of corruption on countries' economic efficiency. By using a sample of 79 countries for the time period 2000-2006 the paper applies DEA window analysis and econometric panel data techniques. The results reveal that there is a U-shaped relationship between countries' corruption perception levels and economic efficiency. Furthermore, it appears that corruption has a negative effect on countries' economic efficiency. For the first time the turning points of such a relationship are being produced indicating that on average terms and regardless of countries' economic structure, Corruption Perception Index (CPI) above five initiate a positive effect on a countries' economic efficiency.

Keywords: Corruption Perception Index (CPI); economic efficiency; generalized least squares; DEA window analysis (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1080/1226508X.2010.533854

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