Effect of Corruption on the Economic Growth of Nigerian

Effect of Corruption on the Economic Growth of Nigerian

ABSTRACT

This study investigates the effect of corruption on economic growth in Nigeria from 1996 to 2015. Johansen co integration test, ADF unit root test, and Ordinary Least Square methods were employed on time series (secondary) data, covering the period of study.

Gross Domestic Product, Corruption Index, gross fixed capital formation and openness of the economy were the variables employed.

One econometric model was specified to examine the effect of the explanatory variables on the explained variable.

The result revealed that that there was significant effect of corruption on the Economic Growth (GDP). Openness of the economy (EOP) was equally statistically significant.

This confirms the existing arguments that the level of corruption in a country is a relevant determinant of the level of economic growth.

INTRODUCTION

In recent times in Nigeria, Public debates have centered on the increasing rate of corruption resulting from in appropriation of public finance and implementation mostly in some of the developing countries. This in turn reduces the level of economic growth in most developing countries.

Corruption becomes visible when the institution of the government was founded due the behaviour of people appointed or elected to manage the government institutions (Anyanwu, 2002; Idomeh, 2006). Corruption has recently become a major issue in foreign aid and Nigeria nation as a whole.

Corruption is associated with poor public finance management as well as in provision of public goods. It encourages tax avoidance, resulting in a lower tax base for government revenue collection.

Price Water Coopers (PwC) studies estimate Nigeria’s tax revenues at 8% of GDP, which is the lowest for comparison countries.

Corruption allows for government expenditure in vested interest rather than public interest. Corruption results in a lack of provision for public goods such as infrastructure for businesses, and education and health care for households.

REFERENCES

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