Economic growth and corruption in emerging markets: Does economic freedom matter?

Leonardo Köppe Malanski and Angela Cristiane Santos Póvoa

International Economics, 2021, vol. 166, issue C, 58-70

Abstract: This study analyzes the effects of corruption on economic growth for different levels of economic freedom. The effects of corruption on the economy, which can increase or decrease growth, were tested in emerging countries in Latin America and Pacific Asia, between 2000 and 2017, through one-step System-GMM estimation panel data regressions. The results showed that economic freedom works as a moderator in the relationship between corruption and economic growth. On both continents, greater economic freedom, on average, supports the growth of GDP per capita. In Latin America, it was possible to corroborate the hypothesis that corruption damages countries with greater economic freedom but favors economic growth in countries with lower economic freedom levels. Regarding the Asian countries studied, there was only a negative effect of corruption on economic growth in countries with less economic freedom. When comparing this reality with the one in Latin America, it was observed that in terms of development, the countries in this continent are in earlier stages compared to the Asian countries, even though both country groups are called “emerging.”

Keywords: Corruption; Growth; Economic freedom; Emerging countries (search for similar items in EconPapers)
JEL-codes: E02 O10 O40 O43 P51 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:166:y:2021:i:c:p:58-70

DOI: 10.1016/j.inteco.2021.02.001

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