The Impact of Corruption on Economic Growth in OIC Countries

Abstract

Economic growth in a country can be attributed to many variables, both positive and negative. Raising the level of human capital, openness and investment are examples of factors typically considered to have a positive impact on economic progress, while corruption is one of the factors that are often seen as detrimental to economic growth. The purpose of this study is to analyse whether the levels of perceived corruption in a cross-section of countries have affected their economic growth rates over the years 2003-2010. The study is conducted with a regression on a sample of 14 countries and eight variables for the time period in question. The models are constructed on the basis of the endogenous growth theory. Results using economic freedom index (EFI) shows that corruption has a negative impact of economic growth in the countries in question.