Is Corruption Contagious? An Econometric Analysis

Norwegian Institute of International Affairs (NUPI) Working Paper No. 742

33 Pages Posted: 1 Oct 2008

See all articles by Joseph Attila

Joseph Attila

RimeLab, Université Nord de France, Université d'Artois

Date Written: September 2008

Abstract

In this paper, I analyze how corruption in one country may be affected by its neighbors' corruption. It seeks to explain why corruption is perpetuating in large geographical areas populated by developing countries despite anticorruption efforts made in the single country. In our empirical approach, we capture the spatial dependency by regional corruption. Three main techniques are used: spatial autocorrelation tests, GMM and three stage least squares. Our results show that, a lower regional corruption (as measured by the average of the level of corruption in one country's neighbors) is associated with a lower level of national corruption. Among the potential mechanisms explaining this correlation, the level of economic development (GDP per capita) seems to be the most important. Foreign aid and trade openness show less clear results. Noneconomic mechanisms such as cross-country contagion processes of voice expressions and demands on accountability are other possible transmission mechanisms.

Keywords: Corruption, economic development, trade, persistence, political factors, social factors

JEL Classification: H1, O10, O2, Z13

Suggested Citation

Attila, Joseph Gbewopo, Is Corruption Contagious? An Econometric Analysis (September 2008). Norwegian Institute of International Affairs (NUPI) Working Paper No. 742. Available at SSRN: https://ssrn.com/abstract=1275804 or http://dx.doi.org/10.2139/ssrn.1275804

Joseph Gbewopo Attila (Contact Author)

RimeLab, Université Nord de France, Université d'Artois ( email )

Université d'Artois
EGASS
Arras, 62000
France
+33321603867 (Phone)

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