The Relationship of Corruption, Property Rights, Unequal Incomes and Democracy: Empirical Evidence from Selected Countries

Authors

1 Associate Professor, Department of Economics, Faculty of Economics & Social Science, Bu-Ali-Sina University

2 Ph.D student of Economics, Faculty of Economics & Social Science, Bu-Ali-Sina University

Abstract

Corruption is a phenomenon of economic, political and cultural disorder, with more or less hazardous effects both in developed and developing countries. In this regard, North and his colleagues (2015) emphasize that only in an open access system (democracy), corruption is controlled and other measures such as improving property rights, although useful in improving the conditions, are not enough to reduce corruption significantly. As this phenomenon is considered one of the most important barriers to growth of developing countries such as Iran with its resistance approaches to economy, identifying the roots and dealing with it has become seriously considered as country's development goals.
The purpose of this study was firstly identifying the phenomenon of corruption in a general equilibrium analysis, and to investigating its relationship with some political-economic influential variables such as property rights and democracy. To do so, a panel model was used to analyze relevant data from 53 selected developing countries for the period of 1996 to 2013. The results indicated a significant negative effect of democracy (-0.49), property rights (-7.56), economic growth (-0.37) and investment (-5.75) on the level of corruption. Moreover, the Gini coefficient of inequality (0.36) and political instability (19.4) showed a significant and positive effect on the corruption index.
In general, economic and political inequalities would weaken the bases of democracy and prepare the ground for a diffusion of corruption in the society. However, the effect of democracy on corruption is dependant on variable of property rights, in a way that with an increase in protection of property rights, democracy can have a better function in controlling corruption, especially in countries with abuse of privileged information in their economy.

Keywords

References

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