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The effect of corruption on growth and investments: Exploring the direct and indirect effects of corruption on growth via three different investment channels in low income countries

Aobadia Sandström, Nora LU and Lägerud, Rebecca (2019) NEKH02 20191
Department of Economics
Abstract
This thesis investigates both the direct effect and indirect effect of corruption on growth via
three different investment transmission channels. According to growth theory, different types
of investment are commonly considered as important contributors to economic growth.
Therefore, this study aims to examine the indirect effect of corruption on growth via
following investment transmission channels: domestic investment, foreign direct investment
(FDI) and human capital investment. Since poor countries are both in general more exposed
to corruption and in need of investments, the direct and indirect effect of corruption on
growth are tested in low and low-to-middle income countries, during a time period of 1996-
2011. The direct... (More)
This thesis investigates both the direct effect and indirect effect of corruption on growth via
three different investment transmission channels. According to growth theory, different types
of investment are commonly considered as important contributors to economic growth.
Therefore, this study aims to examine the indirect effect of corruption on growth via
following investment transmission channels: domestic investment, foreign direct investment
(FDI) and human capital investment. Since poor countries are both in general more exposed
to corruption and in need of investments, the direct and indirect effect of corruption on
growth are tested in low and low-to-middle income countries, during a time period of 1996-
2011. The direct and indirect effect of corruption is tested through conducting four different
multiple regression analysis with panel data. Thereafter this thesis aims to put together these
effects to determine the total effect of corruption on growth. However, the latter was not
conducted since our result shows no strong significant effect of corruption on growth, neither
direct or indirect. Although a weak significant negative of corruption on human capital
investment is indicated. Our result is not in line with previous research, which might be
explained by the properties of our country sample, the econometric method and a possible
need of interaction variables. However, corruption should still be considered distortive for
countries and societies and a greater understanding of the significance of transmission
channels and interaction between corruption and other variables is needed. (Less)
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author
Aobadia Sandström, Nora LU and Lägerud, Rebecca
supervisor
organization
course
NEKH02 20191
year
type
M2 - Bachelor Degree
subject
keywords
Corruption, Economics growth, Transmission channels, Investment
language
English
id
8981211
date added to LUP
2019-08-08 11:32:24
date last changed
2019-08-08 11:32:24
@misc{8981211,
  abstract     = {This thesis investigates both the direct effect and indirect effect of corruption on growth via
three different investment transmission channels. According to growth theory, different types
of investment are commonly considered as important contributors to economic growth.
Therefore, this study aims to examine the indirect effect of corruption on growth via
following investment transmission channels: domestic investment, foreign direct investment
(FDI) and human capital investment. Since poor countries are both in general more exposed
to corruption and in need of investments, the direct and indirect effect of corruption on
growth are tested in low and low-to-middle income countries, during a time period of 1996-
2011. The direct and indirect effect of corruption is tested through conducting four different
multiple regression analysis with panel data. Thereafter this thesis aims to put together these
effects to determine the total effect of corruption on growth. However, the latter was not
conducted since our result shows no strong significant effect of corruption on growth, neither
direct or indirect. Although a weak significant negative of corruption on human capital
investment is indicated. Our result is not in line with previous research, which might be
explained by the properties of our country sample, the econometric method and a possible
need of interaction variables. However, corruption should still be considered distortive for
countries and societies and a greater understanding of the significance of transmission
channels and interaction between corruption and other variables is needed.},
  author       = {Aobadia Sandström, Nora and Lägerud, Rebecca},
  keyword      = {Corruption,Economics growth,Transmission channels,Investment},
  language     = {eng},
  note         = {Student Paper},
  title        = {The effect of corruption on growth and investments: Exploring the direct and indirect effects of corruption on growth via three different investment channels in low income countries},
  year         = {2019},
}