Abstract
This study empirically analyses the impact of corruption on economic growth in Nigeria, using time series data for the period 1980-2015 analyzed through the ARDL technique. The result of the Bound test confirmed the existence of Cointegration among the variables. The ARDL results revealed that corruption has a significant negative influence on economic growth both in the short run and long run. It was further confirmed that external debt, agricultural output, and human capital development positively impact growth while FDI and inflation rate endanger growth, in both the short and long run. The result of the interacting term revealed the damaging influence of corruption on the positive impact of human capital expenditure and external debt on economic growth. Based on the findings of the study, it is obvious that achievement of growth that is sustainable will remain elusive in a corrupt environment. The study, therefore recommends that government should strengthen the activities of the anti-corruption agencies in Nigeria to reduce the rate of corruption.
Highlights
The focus of most Nigerian policymakers has been on formulating policies that would help to revamp the economy from the devastation caused by civil war since independence back to a growth path
The econometric model in this study is as specified in equation 3.1 where external debt stocks, index of economic freedom, corruption perception index, human capital index, agricultural output and foreign direct investment as the independent variables while Real Gross Domestic Product serves as the dependent variable
The paper reviewed theories relating to two divergent ideologies about the impact of corruption on economic growth
Summary
The focus of most Nigerian policymakers has been on formulating policies that would help to revamp the economy from the devastation caused by civil war since independence back to a growth path. In Nigeria, a reasonable proportion of income is usually allocated to various sectors such as power, road infrastructure, communication, education, and among others annually, but the expected impact is highly discouraged, due to the diversion of funds for personal use (Pillary, 2013). This is the reason behind the conclusions reached by the Economic and Financial Crime Commission (2005) that corruption is a deadly disease that has eaten deep into the fabric of the nation and as such has hindered growth in all facets and dimensions of different sectors
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