Investigating the moderating impact of crime and corruption on the economic growth of Bangladesh: Fresh insights

Abstract

This study investigates the moderating role of the corruption index with the impacts of foreign direct investment (FDI), unemployment, corruption, and crime rate on economic growth in Bangladesh from 1988 to 2019. The Augmented Dicky-Fuller (ADF) and Phillips-Peron (P-P) unit root tests were applied to check the stationary properties of the concerned variables. The auto regressor distribution lags approach is used to test the hypotheses. The results show that the corruption index as a moderator has a significant adverse impact on economic growth along with the other variables crime, and unemployment on economic growth. To put it simply, economic growth increases by decreasing corruption, unemployment, and crime rates. Similarly, FDI and trade openness appears as a catalyst for boosting economic growth, but the interaction variable of the trade and corruption index increases the trade costs that may slow down the economic growth. As among the pioneer attempts, the present study contributes to growing literature on the moderator role of the corruption index along with other determinants of economic growth by identifying the role of FDI inflows, trade, unemployment, and crime rates on economic growth in Bangladesh. These empirical findings are directed toward some critical policy implications that will help the governmental bodies and policymakers to achieve sustainable economic growth along with ensuring better employment opportunities and thereby control the crime and corruption rates in Bangladesh.