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Corruption and economic growth: the case of Portugal

Author

Listed:
  • Pedro Bação

    (Centre for Business and Economics (CeBER) and Faculty of Economics, University of Coimbra)

  • Inês Gaspar

    (Faculty of Economics, University of Coimbra)

  • Marta Simões

    (Centre for Business and Economics (CeBER) and Faculty of Economics, University of Coimbra)

Abstract

In this paper we investigate the impact of corruption on economic growth in Portugal over the period 1980-2018. The empirical approach makes use of a VAR model inspired by the standard CobbDouglas aggregate production function. The VAR model includes the capital stock, hours worked,total factor productivity and the corruption perceptions index (CPI) of Transparency International.The CPI combines several sources of information on the level of corruption in each country. The scale of this index goes from 0, the highest level of corruption, to 10, the lowest level. The magnitude of the estimated effect of corruption on economic growth in the unrestricted VAR model is large (and positive), but statistically not significantly different from zero. However, the results from the estimation of a structural VAR model with economically plausible long-run restrictions indicate modest gains from reducing corruption.

Suggested Citation

  • Pedro Bação & Inês Gaspar & Marta Simões, 2019. "Corruption and economic growth: the case of Portugal," CeBER Working Papers 2019-06, Centre for Business and Economics Research (CeBER), University of Coimbra.
    • Handle: RePEc:gmf:papers:2019-06
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    Cited by:

    1. António Afonso & Eduardo Sá Fortes Leitão Rodrigues, 2022. "Corruption and economic growth: does the size of the government matter?," Economic Change and Restructuring, Springer, vol. 55(2), pages 543-576, May.
    2. Nour Mohamad Fayad, 2024. "The Causality Between Corruption and Economic Growth in MENA Countries: A Dynamic Panel-Data Analysis," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 14(1), pages 28-49.
    3. Kaddachi, Hayet & Ben Zina, Naceur, 2022. "The impact of corruption on economic growth in Tunisia: application of ARDL approach," MPRA Paper 114869, University Library of Munich, Germany, revised Nov 2022.
    4. Tânia Pinto & Aurora Teixeira, 2023. "Does scientific research output matter for Portugal’s economic growth?," GEE Papers 0174, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jul 2023.

    More about this item

    Keywords

    Corruption; Economic Growth; Portugal; VAR model; SVAR.;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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