The Impact of Corruption on Human Development in Egypt

Abstract

The objective of this study is to investigate the impact of corruption on human development in Egypt, both in the short and long run, for the period from 1995 to 2018 using the Autoregressive Distributed Lag Model (ARDL). There is a broad amount of the literature that examines the effects of corruption on economic development, but less of the literature, especially empirical, focuses on corruption's effect on human development. Some studies investigate its influences on poverty, others examine those influences on education and/or health but this study assesses its impact on human development expressed by the Human Development Index with its three dimensions. This study contributes to the literature on investigating the determining factors of human development by adding corruption as one of the institutional variables influencing human development besides economic factors. The empirical analysis shows that corruption has a negative and significant effect on human development in both the short and long run, meaning that increased corruption weakens human development. As for GDP per capita, it has a significant and positive effect on human development in both the short and long run. While the government expenditure's effect is insignificant in the short run, it becomes significantly positive in the long run. With regard to urbanization, it affects human development negatively in the short run, and its effect becomes positive -but insignificant- in the long run. The study concludes that policymakers can combat corruption by focusing on causes not on effects.