E3 Journal of Business Management and Economics

E3 Journal of Business Management and Economics Vol. 4 (3) pp. 054-065, March 2013; © E3 Journals; ISSN 2141-7482

An econometric analysis of the impact of Corruption on economic growth in Nigeria

Abstract

Over the years corruption has received a considerable amount of attention due to some reasons, prominent is the liberalization of press in many parts of the world and increasing awareness that has been created on the detrimental effect of corruption on economic growth. Nigeria is blessed with abundance of resources and particularly known for her wealth of oil, however, this is not evident in the economy due to the presence of corruption in the country. This study empirically investigates the impact of corruption on economic growth in Nigeria on an annual time series data from 1980-2009 using regression analysis. Also, the Granger causality test and impulse response function was carried out. The empirical results reveal that corruption per worker exerts a negative influence on output per worker directly and also indirectly on foreign private investment, expenditure on education and capital expenditure per worker. Furthermore, the study revealed that there is a one-sided causality where the direction of influence runs from output per worker to corruption per worker. This study therefore recommended a strategy that depends excessively on actions in various sectors in combating corruption in the Nigerian economy as against a single action (establishment of anti – corrupt agencies).

Keywords: Corruption, Economic growth and Regression