The impact of corruption on the economic growth in Bangladesh, India and Pakistan: An ARDL approach

Abstract

Purpose of the study: Main purpose of the paper is to find out the impact of corruption on the economic growth of Bangladesh, India, and Pakistan. At the same time, our other objectives are to find the long and short-run effects of corruption on growth in these countries. Methodology: For conducting the study, we have taken the data from Bangladesh, India, and Pakistan. For this study necessary secondary data have been collected from 1990 to 2016 based on countries like Bangladesh, India, and Pakistan. Data for economic growth (dependent) and trade (independent) are collected from World Development Bank and data for corruption are taken from International Country Risk published by the PRS Group. The study has used ECM ARDL Model and the Fixed Effect Model.  Findings: The result of the fixed effect model shows a 1percent increase in corruption decreases GDP by 0.07 units and shows a negative relationship with economic growth. Again if trade increases by 1 percent then growth will increase by 0.09 units on average and shows a positive relationship with economic growth. ECM ARDL Model shows the positive coefficient of corruption but not significant but trade has a long-run positive influence on economic growth. The error correction term indicating that the adjustment is corrected by 70% in these three countries. Contributions: This paper may be helpful for existing literature gap and also for further research. It will be helpful for policy makers to control corruption in three countries.