CORRUPTION'S DIRECT EFFECTS ON PER‐CAPITA INCOME GROWTH: A META‐ANALYSIS

Abstract

Corruption is a symptom of weak institutional quality and could have potentially adverse effects on economic growth. However, heterogeneity in reported findings makes it difficult to synthesize the evidence base with a view to test competing hypotheses and/or support evidence‐based policy and practice. To address this issue, we have extracted 327 estimates of corruption's direct effect on per‐capita GDP growth from 29 primary studies, following a peer‐reviewed and pre‐published systematic review protocol. Precision‐effect and funnel asymmetry tests indicate that corruption has a negative effect on per‐capita GDP growth after controlling for publication selection bias and within‐study dependence. However, multivariate meta‐regression analysis results indicate that the overall effect is not robust to inclusion of moderating variables through a general‐to‐specific procedure for model specification. We report that the marginal effect of corruption on per‐capita GDP growth is more adverse when the primary study estimates relate to long‐run growth, are based on low‐income‐country data only, and extracted from journal papers. The effect is less adverse in studies that use the International Country Risk Guide corruption perceptions index and in those reporting estimates from two‐stage least‐squares estimations.