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Estimating the effects of corruption - implications for Bangladesh

Author

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  • Rahman, Aminur
  • Kisunko, Gregory
  • Kapoor, Kapil

Abstract

Building on the pioneering work of Barro (1991) and Mauro (1995) to include the most recent years for which data are available (for Bangladesh in the 1990s), the authors investigate the relationships between corruption, and growth, and, between corruption and investment, both domestic and foreign, to see whether they have changed from earlier decades. Then they move away from Mauro's implicit assumption that the corruption index value for a relatively short period of time, can be used as a proxy for the long run, and further augment Mauro's model by including significant regional dummy variables, in an attempt to take account of various region-specific effects. The authors also analyze the sensitivity of corruption in the presence, and absence of various policy, geographic, and demographic variables that are widely used in empirical growth, and investment literature. The findings suggest that countries serious about improving governance, and reducing corruption, should redefine the role of government, overhaul the system of incentives, and strengthen domestic institutions, to make sure the necessary checks, and balances are in place. Such an approach to reform would help attract more investment - both domestic and foreign - and would accelerate economic growth, and poverty reduction.

Suggested Citation

  • Rahman, Aminur & Kisunko, Gregory & Kapoor, Kapil, 2000. "Estimating the effects of corruption - implications for Bangladesh," Policy Research Working Paper Series 2479, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2479
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    References listed on IDEAS

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    Cited by:

    1. Ugur, Mehmet & Dasgupta, Nandini, 2011. "Corruption and economic growth: A meta-analysis of the evidence on low-income countries and beyond," MPRA Paper 31226, University Library of Munich, Germany, revised 31 May 2011.
    2. Mehmet Ugur, 2014. "Corruption'S Direct Effects On Per-Capita Income Growth: A Meta-Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 472-490, July.
    3. Zhang Yu & Muhammad Umer Quddoos & Syed Abdul Rehman Khan & Muhammad Munir Ahmad & Laeeq Razzak Janjua & Muhammad Sajid Amin & Abdul Haseeb, 2023. "Investigating the moderating impact of crime and corruption on the economic growth of Bangladesh: Fresh insights," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 26(2), pages 185-207, June.
    4. Biru Paksha Paul, 2010. "Does corruption foster growth in Bangladesh?," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 9(3), pages 246-262, September.
    5. Roy, Dilip Kumar, 2005. "Governance and Development: The Challenges for Bangladesh," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 31(3-4), pages 99-136, Sept-Dec.
    6. Pulok, Mohammad Habibullah, 2010. "The Impact of Corruption on Economic Development of Bangladesh:Evidence on the Basis of an Extended Solow Model," MPRA Paper 28755, University Library of Munich, Germany.
    7. Lim, Sung-Hoon, 2005. "Foreign investment impact and incentive: a strategic approach to the relationship between the objectives of foreign investment policy and their promotion," International Business Review, Elsevier, vol. 14(1), pages 61-76, February.

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