Conviction in White Collar Crime and Economic Growth with special reference to Pakistan

Abstract

Objective: This study served as an effort to evaluate the relationship between economic growth, corruption and deterrence against white collar crime along with traditional factor inputs like labor and capital especially in context of Pakistan.

Research Gap: Countries always tend to formulate economic policies that will contribute to high economic growth rates. Apart from economic factors there are certain for economic growth there are non-economic factors which had played a significant role in achieving high living standards amongst which deterrence against white collar crimes is our focus. Very few studies had been conducted that determine the impact of this factor on economic growth in Pakistan.

Design/Methodology/Approach: To determine how corruption and the prevention of white-collar crime affect Pakistan's economic development Neo-Classical Growth Model has been applied. Using secondary data over a 20-year period, from 2001 to 2020, the log-linear model regression has been utilized to assess the association between economic growth and corruption and deterrence related to white collar crime in Pakistan.

The Main Findings: The estimates suggest that traditional input variables, such as Labor and capital, positively impact GDP growth. However, the apparent insignificance of capital stock might result from a lack of necessary skills in the labor force. To address this, labor force skills should be enhanced through technical and vocational training. A favorable position in the Corruption Perception Index, along with deterrence factors like the fear of being caught also positively contribute to GDP growth. Convicting corrupt individuals increases the fear of consequences, discouraging future involvement in corruption. As a country embraces transparency, it fosters higher economic growth.

Theoretical / Practical Implications of the Findings: This paper concludes that deterrence i.e. fear of being caught for having committed organized crime restrains corrupt elements from involvement in white collar crimes and contributes in economic growth. The paper further concludes that skilled and educated labor force also contributes in economic growth through efficient utilization of capital stock.

Originality/Value: This study not only models the effects of labor and capital but also endeavors to integrate the influence of accountability on overall economic growth.