The Impact of Corruption on Economic Growth in Tunisia: An Application of ARDL Approach

The Impact of Corruption on Economic Growth in Tunisia: An Application of ARDL Approach

Hayet Kaddachi, Naceur Benzina
Copyright: © 2024 |Pages: 25
DOI: 10.4018/979-8-3693-1746-4.ch007
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Abstract

This chapter aims to examine the impact of corruption on economic growth in Tunisia between the years 1998 and 2018.Using time series data to obtain relationships of an empirical nature. The processing of time series data starts with checking individual series, and ADF and Zivot and Andrews tests help identify variables' stationarity. The mixed order of integration levels recommends using ARDL to obtain the long-run relationships between the variables. The estimation results confirm that corruption demoralizes and discourages private investment in the short and long run. In both the long and short run, the indirect impact of corruption is negative and insignificant for public spending. However, the interaction between human capital and the corruption perception index is positive and insignificant in the short run but negative and significant in the long run.
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2. Literature Review

Based on endogenous growth theory, several adverse effects of corruption on countries' economic growth are widely recognized in the economic literature. Corruption diverts investors, reduces the productivity of public spending, distorts the allocation of resources and reduces economic growth; the idea is confirmed in the publications of Pellegrini, L., & Gerlagh, R. (2004). and Méon, P. G., & Sekkat, K. (2005).

In this context, Mauro (1995) article considered the first empirical assessment highlighting corruption with many economic, social and political variables. In his article, Mauro explained, over a period from 1960 to 1985, the adverse effect of corruption on private investment. The idea is confirmed by Campos, N. F., Estrin, S., & Proto, E. (2010) , Zhou, J. Q., & Peng, M. W. (2012).

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