Impact of Corruption on Economic Growth in Pakistan: A Comparative Approach

Abstract

This work is intended to find a relationship between corruption and economic growth. Economic growth is viewed in terms of per capita GDP and corruption is quantified as corruption perception index (CPI) published by Transparency International annually. Population, investment, total public expenditures, and expenditure in education by the government are used as the determinants of GDP. Study period expands from 1995 to 2019. Solow growth model is modified for the purpose to incorporate corruption with the macroeconomic variables of economic growth. Auto Regressive Distributive Lag (ARDL) Bounds Testing methodology is used for the analysis. The results authenticate a long run relation amid corruption and economic growth in the economy of Pakistan. The estimates signify that corruption poses negative effects on per capita GDP and thus diminishes the economic growth of the country.