THE ECONOMIC COSTS OF CORRUPTION: DOES CORRUPTION REALLY AFFECT GDP PER CAPITA?

Abstract

Corruption, being one of the most common characteristics of developing countries, has earned the subtle recognition of crippler to the economy. However, the co-existence of underdevelopment and corruption makes it important to establish causality. This paper tries to do so, under a cross country setting, based on data collected from the World Bank(WB) and Transparency international(TI) . Findings from Ordinary Least Square (OLS) regression suggest ‘corruption does lower GDP per capita, although the overall magnitude is moderate and varies from country to country.