Corruption, imported innovation, and growth: Evidence using the panel smooth transition regression approach for developing countries

Abstract

This article investigates the nonlinear relationship between corruption, imported innovation (imports of high technology), and economic growth in developing countries from 2009 to 2018. We used a sample of 38 countries divided into two subsamples. The first covers 21 African countries, and the second covers 17 non-African countries. The empirical results from the panel smooth transition regression model indicate that there is a threshold effect in the two relationships: corruption–imported innovation and corruption–growth. Specifically, we found that corruption exerts a significant effect only for non-African countries. However, no significant effect was found for the whole sample and African countries. Furthermore, we found that below certain thresholds, corruption significantly decreases the level of growth for both the whole sample and the two subsamples. Above these thresholds, the effect of corruption becomes positive and significant.