Corruption In Asean-5 : Greases Or Sands The Wheels Of Growth

Foo, Isaac Yong Nuo (2016) Corruption In Asean-5 : Greases Or Sands The Wheels Of Growth. [Final Year Project Report] (Unpublished)

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Abstract

Corruption and its impact on economic growth has becoming a more important issue to be studied. This is because corruption will affect economic growth at a greater scale as the world is becoming more globalized. There is no exact relationship between corruption and economic growth as the locations, methods, data, and time periods are different for each study. Thus, this paper intends to investigate the short run and long run relationship between corruption and its effect on economic growth in ASEAN-5 countries.The data sets for this study are taken annually from year 1995 to year 2014, which sourced from World Bank, Transparency International, and Freedom House. In this paper, a series of econometric tests are conducted based on the combination of test variables and control variables. The variables included gross domestic product (GDP) growth rate, GDP per capita, population, investment, trade openness, and political freedom and corruption. In addition, the relationship is identified through Levin, Lin, and Chu (LLC) Unit Root Test, Pooled Mean Group (PMG) Method, and Fully Modified OLS (FMOLS) Estimator. The results indicates that corruption affects negatively on economic growth in short-run, particularly in Indonesia, Singapore, Thailand, and Philippines but has no significant effect on economic growth in long-run. Lastly, this paper suggested the possible actions in this issue, the limitation of this paper, and the idea on further studies that are related to this topic.

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