Does democracy reduce corruption? A cross-country causal counterfactual analysis

Abstract

This paper examines the causal effect of the levels of democracy in countries on the levels of corruption. Research shows that the levels of corruption in countries decrease when they reach higher levels of democracy. However, most of the evidence has been obtained through correlational or regression studies that do not make clear the causal connection between the variables. The research applied a robust estimator (IPWRA) to a database of 161 countries with average data from 2010-2019, assessing a causality model within the counterfactual framework. The results indicate that a causal relationship does exist; that is, a higher level of democracy in the countries reduces the levels of corruption.