MODERATING IMPACT OF CORRUPTION ON ECONOMIC GROWTH

Abstract

There has always been a constant discussion in economics about economic growth. The classical growth models, especially Solow-Swan model, highlight the importance of factors, such as capital, labor and technology to explain Economic Growth. This study has considered the same factors following Solow-Swan framework. This study used panel data from 2011-2015 from 87 countries. The data for capital, labor, technoogy and economic growth are derived from Total Economy Database and corruption data are derived from Transparency International. This quantitative research uses single and multiple regression to test the hypotheses that capital, labor and technology have positive impact on economic growth, which could be moderated by corruption. The results show that capital, labor and technology have significant impact on economic growth. However corruption does not have significant impact for most of the years but is significant in the year 2015. During the same year the impact of labor becomes less significant.