Socioeconomic Determinants of Corruption: A Cross Country Evidence and Analysis

Abstract

Corruption has significantly contributed towards slow economic growth, terrorizes security, damages individual's trust and public confidence in the systems, and thereby, affect individuals' daily lives. The aim of the study is to empirically investigate socioeconomic determinants of corruption using panel data set of Developing Eight (D-8) countries and GMM estimation method. The results suggest that economic development, government size, income inequality, urbanization and education have statistically significant impact on corruption. An increase in economic development, government size and education level lowers the corruption, where as, skewed income distribution and urbanization enhance its level. However, inflation, economic competition and female labor force participation are found statistically insignificant. The study findings are based on data set for D-8 countries, which are all Muslim nations. Therefore, study's results should be taken with caution in formulating the policies. But, still, these results have important implications; economic managers should focus on the policies that promote education, economic development, less skewed income distribution and government size to control the corruption in the country.