Impact of Corruption on Economic Growth: Evidence from Asian Countries

Abstract

Previous literature argues that corruption hampers economic performance. Moreover, there is limited literature available on the interaction between corruption, government spending, and its effect on the overall economic taxonomy in Asia. This study employs the use of various classifications of government expenses and then analyses their impact on economic performance using different measures of corruption. The findings provide evidence that corruption has an inverse effect on military spending but concurrently it has an indirect and negative impact on economic activity within a country. This study also contrasts the findings of corruption and economic growth in Asian and African countries reporting that a higher level of corruption is deterring economic growth for Asian economies. The policy implications suggest that the association between corruption and economic growth is worsening in countries that utilise excessive government expenditures. Hence it is imperative that states monitor their government spending more closely to eliminate the corrupt practices.