How does corruption affect sustainable development? A threshold non-linear analysis

Fredj Fhima, Ridha Nouira and Khalid Sekkat

Economic Analysis and Policy, 2023, vol. 78, issue C, 505-523

Abstract: This paper investigates the impact of corruption on sustainable development using the Seo and Shin (2016) threshold model for a panel data set of 96 to 103 developed and developing countries from 1996 to 2019. The paper contributes to the ongoing debate about whether corruption greases or sands the wheels of sustainable development. All results support the hypothesis of the existence of thresholds. Examining the full sample, the impact of corruption on sustainable development is regime-specific and dependent on the quality of governance. In developed countries, corruption always hinders sustainable development, while in developing countries the impact of corruption on sustainable development is regime-specific and dependent on the quality of governance. When the quality of governance is low, highly corrupt countries achieve higher levels of sustainable development, which is consistent with the “grease the wheels” hypothesis.

Keywords: Corruption; Governance; Sustainable development; Threshold models (search for similar items in EconPapers)
JEL-codes: C24 D73 G3 O47 Q01 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:78:y:2023:i:c:p:505-523

DOI: 10.1016/j.eap.2023.03.020

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