Political environment a ground for public sector corruption? Evidence from a cross-country analysis

This study employs the instrumental variable two-stage least squares regression approach for the data for 121 countries to explore the impact of a country’s political environment on its level of corruption. The study provides strong evidence that a higher degree of rule of law, press freedom, readiness and capacity to handle e-governance practices, and urbanization are associated with a lower level of public sector corruption across all 121 countries. The colonial dummies and having a presidential government are found to be valid instruments for rule of law in addressing the issue of endogeniety embedded in it. Further, to a certain degree, landlocked countries are relatively more corrupt than costal countries. Finally, policy implications are discussed based on the findings of the study.