Re-examining corruption and economic growth nexus in oil dependent economy: Nigeria’s case

Mathew Ekundayo Rotimi, Ojo Joseph IseOlorunkanmi, Gift Grace Rotimi and Mishelle Doorasamy

Journal of Money Laundering Control, 2021, vol. 25, issue 3, 526-539

Abstract: Purpose - The purpose of this study is to empirically examine how corruption impacts economic output growth in Nigeria. This is because of the recent trend in the level of corruption. Design/methodology/approach - Using time series data ranging from 1995 to 2019, this study used the Johansen cointegration estimating approach and vector error correction mechanism to show an equilibrium relationship between output growth and other variables (oil revenue and corruption). To conduct the integration test, this study in the preliminary, used unit root test. Findings - This study finds unidirectional and bidirectional causal relationships among variables. Contrary to a few studies, this study shows an equilibrium relationship between output growth and other variables (oil revenue and corruption). Thus, an increase in corruption at equilibrium would weaken output growth. Nonetheless, this study finds a gradual return of the deviation from the long-run stability over an arrangement of imperfect short-run adjustments. Based on the findings, to enhance economic growth, this study recommends zero tolerance for corruption. It also recommends that governments should further strengthen anti-corruption institutions and incorporate anti-corruption movements into decision-making processes. Originality/value - This study adds to the literature by re-examining for the first time the relationship between corruption and economic growth in Nigeria. This study also deals with some econometrics issues which are found to be appropriate estimation to determine the equilibrium and stability in this study.

Keywords: Nigeria; Granger causality; Corruption; Output growth; Oil revenue (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:jmlc-06-2021-0057

DOI: 10.1108/JMLC-06-2021-0057

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