Original scientific paper

https://doi.org/10.1515/zireb-2017-0011

Corruption in Transition Economies: Cause or Effect?

Adisa Arapović ; Vice-Rector, Associate Professor of International Finance and Economics at International BURCH University Bosnia and Herzegovina
Craig A. Depken, II ; Department of Economics in the Belk College of Business at UNC Charlotte
Mirsad Hadžikadić ; Director of the Complex Systems Institute and Professor of Software and Information Systems in the College of Computing and Informatics at the University of North Carolina at Charlotte

Abstract

This paper investigates the empirical relationship between corruption, economic growth, and government spending in fourteen transitioning economies from 1995-2013. We find strong evidence of bilateral Granger causation between economic growth and corruption for the full sample but weaker evidence of such a relationship for four former Yugoslav republics. We also find bilateral Granger causality between government spending and corruption but a weaker unidirectional Granger causality from government spending to corruption in four former Yugoslav republics. Our results recommend caution when assuming that corruption is purely exogenous in empirical models.

Keywords

economic growth; government spending; public corruption; Granger causality

Hrčak ID:

182009

URI

https://hrcak.srce.hr/182009

Publication date:

24.5.2017.

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