The Nonlinear Impact of Globalization on Corruption

Abstract

Some researchers have argued that globalization has increased the opportunity for corrupt practices, while others state that globalization has lead to a decrease in corruption as countries wishing to join the global economy must comply with international anti-corruption rules and regulations. This study empirically explores this paradox using the Corruption Perceptions Index (CPI) and the Konjunkturforschungsstelle (KOF) globalization Index. The results suggest that a nonlinear relationship exists between globalization and corruption. Specifically, the results of this study suggest that the effect of globalization on corruption is dependent on the level of globalization with the highest corruption levels realized at moderate or transitioning levels of globalization.

Keywords: globalization, corruption, KOF globalization index

JEL Classification: F0, D73