Economic and Institutional Determinants of Corruption: The Case of Developed and Developing Countries

Since ancient times, corruption has been one of the essential topics for economists and politicians. Moreover, it is a concern for both developed and developing countries and a significant obstacle to economic development. The primary objective of this paper is to examine the relationships between corruption, economic growth, internet use, and quality of governance alongside other institutional and economic variables in 65 developed and developing countries for the period 1999–2016 by using dynamic panel data methods performing well under cross-sectional dependence. The empirical results can be summarized as follows. The augmented mean group (AMG) results indicate statistically significant relationships between corruption, economic growth, internet use, quality of government, and democracy. Also, we find that an increase in economic growth and quality of governance contribute to reducing corruption in these 65 developed and developing countries. In contrast, an increase in internet use and democracy level raises corruption. The policy implications of the empirical estimations are also discussed in the paper.