The Impact of Corruption, Government Effectiveness, FDI, and GFC on Economic Growth: New Evidence from Global Panel of 48 Middle-Income Countries

Chebli Mongi () and Kais Saidi ()
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Chebli Mongi: University of Tunis El Manar
Kais Saidi: University of Sfax

Journal of the Knowledge Economy, 2024, vol. 15, issue 3, No 29, 10696-10721

Abstract: Abstract This paper examines the interrelationships between corruption, public governance, gross fixed capital formation (GFCF), trade openness (TO), foreign direct investment (FDI), and economic growth (GDP) for a global panel of 48 middle-income countries over the period 1996–2019. A multivariate panel model was employed to evaluate the long-run relationship, and the panel Granger causality tests was used to assess the causality direction among different variables. The obtained results reveal that FDI and GFCF positively and corruption negatively affect economic growth. The empirical results from the Granger causality test reveal a bidirectional causality relationship between the FDI, GFCF, TO, and GDP in presence of political factors and corruption. Moreover, our empirical findings confirm the existence of unidirectional causality running from GDP, FDI, and GFCF to corruption, from government effectiveness to FDI and GFCF. The policy implications of these results are also proposed and discussed.

Keywords: Foreign direct investment; Gross fixed capital; Economic growth (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01509-0

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