Corruption, economic growth and the informal sector: Empirical evidence from developing countries

Arbeitspapier

The main objective of this paper is to contribute to in-depth literature on the relationship between growth and the informal sector in the presence of corruption. The impact of the interaction between growth and corruption on economic performance (increase or decrease of the informal sector) will be discussed. To the best of our knowledge, our paper is unique in the empirical literature because it studies the effect of the interaction between growth and corruption in the informal sector using a sample of developing countries. Our results based on the FE, system GMM, MG, AMG, and IV-2SLS for 112 countries between the 1991- 2015 periods, show that growth reduces informality in the direct effect regression. Moreover, economic growth interacts with corruption and produces negative net effects up to a corruption threshold of 4.79745 when this effect is nullified. This negative net effect was found to be robust across different regional groupings and income groups except in the Middle East and North Africa (positive net effect) and high income and upper-middleincome countries (only direct effects) producing different thresholds per sample. The study recommends that policymakers should intensify their fight against corruption in their quest to reduce the size of the informal economy.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: AGDI Working Paper ; No. WP/22/014

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Bureaucracy; Administrative Processes in Public Organizations; Corruption ; Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation: Models and Applications ; Informal Labor Markets ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements ; Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
• Thema: Informal sector ; Growth ; Corruption ; Developing countries

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Ngouhouo, Ibrahim ; Njoya, Loudi ; Asongu, Simplice
• Ereignis: Veröffentlichung
• (wer): African Governance and Development Institute (AGDI)
• (wo): Yaoundé
• (wann): 2022

Weitere Informationen

• Handle: http://hdl.handle.net/10419/262068
• Letzte Aktualisierung: 20.09.2024, 08:22 MESZ