Journal Analysis Relationship between bribery andEconomic Growth-An Empirical analysis Published in March 1st 2010
Journal Details• Indian Journal of Economics & Business• Started in 2002.• It is published at least 2 times per year.• Double Refereed International Journal• Managed by 20+ Associate Editors & 15 + Editorial Advisory board..
Index of the Journal• Introduction.• Defining Bribery and Bribery in International Business.• Review of Extant literature.• Theoretical Framework.• Data and Methodology.• Result and Analysis.• Policy and Implication Limitations.• Conclusions.
Introduction• Focus of this paper• If the level of bribery in a country affects the rate of its economic growth• If the rate of economic growth in a country affects the level of bribery in that country.
Defining Bribery and Bribery in International Business• Definition of Bribery.• The growth in international trade and relative increase in bribery.• Seriousness of Bribe taking has forced organizations control and discourage bribe taking
Review of Extant literature• Determinants of bribery• Determinants of economic growth.• Formula by the World Bank C = M + D-A-S – C for corruption, – M for monopoly, – D for discretion – A for accountability – S for salary
Theoretical Framework• Studies unequivocally show that bribe taking is much lower in countries with high incomes.• Prevalence of high levels of bribery retard economic growth.• High levels of economic growth will reduce the prevalence of bribery.• Bribery and economic growth can exist concurrently. Bribery prevents incomes from rising and rising incomes reduce the prevalence of bribery.
Data and Methodology.• Level of bribery is measured by the Corruption Perception Index (CPI).• Level of Economic Growth is measured by Gross Domestic Product (GDP).• GDP was collected for 20 countries over a 12 year period from IMF.• CPI was collected over the three years from a wide variety of sources (www.transparency.org)
Result and Analysis• Two statistical treatments. – Two sets of regression analysis were run on each of the two variables for country specific data and for the entire data taken together to test for two- way causality. – In one regression, CPI was the dependent variable; in the other GDP was the dependent variable.• Results are available in the Journal.
Policy and Implication Limitations• Every country needs to be assessed on its own particularities for business and investment purposes• General businesspersons may expect to encounter low levels of bribery in high income countries .• In formulating strategies for economic growth, policy makers need to tailor them to the specific economic and social conditions of the specific country• Even if bribery is eradicated may not be enough to stimulate higher levels of economic growth if other barriers to trade and investment are not dismantled.• Rapid economic growth should not relax the authorities from seeking to keep bribery under control.• The evidence is that in some cases, economic growth can lead to continued bribery.
Conclusions• Bribery and economic growth impact each other both unidirectionaly and simultaneously• The impact of lower levels of bribery on economic growth is stronger.• There may not exist any relationship among these two variables in some countries.