Studying the Effect of Corruption on Income Per-capita Level in an IV Estimation in Developing countries

Authors

  • Hoda Hassaballa

DOI:

https://doi.org/10.14207/ejsd.2017.v6n1p57

Abstract

Income per-capita is a measure of economic well-being. Through its effect on economic development, it can indirectly affect sustainable development. Hence, it is essential to study the determinants of Income per-capita Level. Recently, corruption level has played an influential role in determining income per-capita.  However, theoretically and empirically its effect is still debatable. Besides the traditional determinants of income per-capita, the effect of corruption on Income per-capita level is examined in a sample of developing countries between1996-2013. There is a potential endogeneity problem that arises from the two way relationship between corruption and income per capita levels which threatens internal validity. Accordingly, an instrumental variable (IV) in a two stage least squares (2SLS) estimation is conducted. The results indicate its presence. Furthermore, the results show that corruption is a significant determinant of income per-capita level in developing countries. Policy implications to promote governance which in turn affect sustainable development are also given.

 

Keywords: Income per-capita, corruption, IV estimation and developing countries.

JEL: H8, O1

 

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Published

2017-01-31

How to Cite

Hassaballa, H. (2017). Studying the Effect of Corruption on Income Per-capita Level in an IV Estimation in Developing countries. European Journal of Sustainable Development, 6(1), 57. https://doi.org/10.14207/ejsd.2017.v6n1p57

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Articles