Causes Of Corruption: Dynamic Panel Data Analysis Of Some Post Soviet Countries And East Asian Countries

Abstract

Corruption is an important social and ethical problem. Determining root causes of it should be the first step to fight it. In this study, using a dynamic panel data approach, we try to determine the likely causes of level of corruption in some of the former USSR countries and East Asian countries. Regression results show that, past values of corruption and the level of political rights in a country are the factors that are most affecting the level of corruption in a country. Degree of opennes to the foreign trade, interference of government in the economy, FDI inflows, degree of civil liberties seem not to have significant effect on corruption level in a country. Level of inflation, unemployment, per capita GDP seems not to be among the causes of corruption, but rather they are “caused by the corruption”. There seems no significant differences between East Asian Countries and post-communist countries in terms of corruption level, when the effect of other variables are kept constant.