Genuine Wealth Per Capita As a Measure of Sustainability and the Negative Impact of Corruption on Sustainable Growth in Sub-Sahara Africa

Abstract

In this paper, we argue that the answer to the question of whether the impact of corruption on development is homogenous, is no. Our optimism rest on how development may be conceptualised. When equated to a narrow measure in economic-wise which fundamentally ignores critical issues, then there is a possibility the outlook could be positive. But when conceptualised using a broad-based approach such as sustainable development, then the outlook could be negative. We assess a panel of 22 economies in Sub-Sahara Africa with the most recent dataset (1996-2013) from the World Bank and other reputable agencies. Our finding is quite robust. It holds in pooled OLS, Fixed effects and GMM within IV settings; and it also holds for different measures of institutions and different measures of development using growth per capita GDP and genuine wealth per capita, respectively. Taking stock of major policy blue-prints of selected countries in the region on the fight against corruption, we are able to point out that institutions play important role in insulating citizens against the devastation caused by corruption. Overall, through this comparison, we are able to signal that both incidental and systematic corruption poses a long-term threat to sustainable development.

Keywords: corruption, sustainable growth, Sub-Sahara Africa, institutions, governance

JEL Classification: D72, D73, D78