The Economic Effect of Corruption in Italy: A Regional Panel Analysis

Lisciandra, Maurizio and Millemaci, Emanuele (2015): The Economic Effect of Corruption in Italy: A Regional Panel Analysis.

Abstract

This paper provides a within-country analysis of the impact of corruption on economic growth using a panel of Italian regions from 1968 to 2011 through a robust measure of corruption. This measure is averaged over 5-year periods to reduce short-run fluctuations and to reduce probable delayed effects, which are typical for latent phenomena such as corruption. The results show a significant negative impact of corruption on long-term growth in all specifications, both on average and for each Italian region. As a consequence, a zero-level of corruption is growth maximizing. This effect is non-linear such that the negative impact of corruption on growth becomes less intense as corruption increases.

• Item Type: MPRA Paper
• Language: English
• Keywords: corruption; economic growth; cross-regional analysis; dynamic panel data
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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