Corruption and sustainable growth : comparative analysis of Sub-Sahara Africa and East Asia

Abstract

Contemporary works on the devastating effects of corruption on well-being have mainly been explored in relation to cconomic development (ED) at the macro and micro levels, ignoring issues that pertain to sustainability. As a consequence, resource-rich economies such as the ones in Sub-Sahara Africa (SSA) and elsewhere are increasingly at risk of losing out through over exploitation. This poses as a threat which may adversely affect inter-temporal social welfare and in effect keep the status quo on inequality and deprivation. The purpose of this research therefore is in twofold: 1) to identify and study the sources of corruption and; 2) to assess the effect of corruption on economic and sustainable outcomes between Sub-Sahara Africa and East Asia (EA). The study extends conventional factors regarding the sources of corruption in contemporary literature with the ones that are institutionally embedded to answer the question on whether traditional sources of corruption holds in the face of effective corruption controls in both Sub-Sahara Africa and East Asia. The study uses unbalanced panel data on 22 economies in Sub-Sahara Africa and 15 in East Asia. Secondary data were collected from 1970 to 2013 on most of the croeconomic indicators and from 1995 to 2013 on some of the . The study measured sustainability using genuine wealth per ca contrast to growth in GDP per capita, which measures economic growth. For the purpose of consistency and to address the endogeneity problem, three different econometric estimators were used to estimate the empirical results. The secondary a were collected from recognizable sources such as the World Bank, Tr tional, Freedom House, Polity IV Project, and Heritage Foundati others. The empirical results succinctly show some of the determinants identified under the three theories of corruption were variedly related amidst some level of differences. Regarding the relationship between corruption and sustainable growth, there were divergence from the popular notion of corruption being positively correlated with growth in GDP per capita. Rather, the study found a negative relationship when regressed on genuine wealth per capita on SSA sample. Evidence of the resource-curse hypothesis were also captured in this study especially on SSA. The study also found elements of colonial legacy to be responsible for Africa's poor choices of economic policy over the past years evident in the quality of institutions. However, the relation in EA was in contrast as there was a positive relationship between corruption and sustainable growth. The differences in the outcomes among the regions were linked to the effectiveness of existing institutions regarding the formulation of sound policies to address societal challenges. Moreover, controlling simultaneously for growth related factors and institutional factors, the study found East Asia's outward trade policy backed by broad-base growth in agriculture as an important input that partly explains its path. The study in this regard was able to signal that incidental and systematic corruption poses a long-term threat to sustainability. A number of recommendations to that effects were made to SSA and economies in EA that shares similar challenges on deepening good governance, professionalizing the civil service, and upholding the rule of law to reduce the level of impunity. Bodies responsible for the implementation anticorruption measures in SSA should be independent in practice from ment. East Asia should on the other hand continue in its appro fighting corruption in order to enhance the well-being of its citizens while working to enhance areas such as democracy and climate change. The study concludes by reechoing the need to adopt a broad-based approach to the conceptualization of well- being.