The Impact of Corruption, FDI and ODA on Economic Growth

Abstract

Purpose– This study compares the impact of corruption on economic growth in developing countries located in Asia and Latin America. Design/methodology–To identify the effects of corruption, FDI, and ODA on economic growth. The estimated model is established based on two models in this study. First, the most basic model, the pooled OLS, was used. In addition, a random effect model was used according to Hausman Test result. The CPI data is provided by Transparency International. Data of FDI and ODA are provided by World Bank. Findings–The empirical analysis shows no difference between regions. But the findings show some facts. The CPIs in both Latin and Asian countries have a positive impact on economic growth. This means that corruption should be reduced because it negatively affects economic growth. The FDI also has a positive effect on economic growth while the ODA has a negative effect on economic growth. These results shows that FDI should be increased, and ODA should be used efficiently for economic growth. Research implication or Originaltiy–There is no more lubricant effects occur. And then in the case of FDI, it must be invested in an efficient and constructive industries. The case of ODA, it will have to be invested in education and research projects, not just consumption.