Effects of corruption on human development. Evidence for developed and developing countries

Abstract The aim of the paper is to determine the effect of corruption, using human development index (HDI), and its sub-indices: education, life expectancy and gross national income in 135 developed and developing countries over the period of 2005–2021. A dynamic estimation (sys-GMM) method was employed and the transformation of Prais-Winsten with corrected standard errors for correlated panels (PCSE) and GMM were used for robustness check. The findings show that corruption, in any of the indices, serves as a human development constraint for both the overall country sample, and for the countries grouped by income level. An interesting result is that the education index in the lower-income countries is more sensitive to corruption, while corruption affects the income index to a greater extent in the higher-income countries. The analysis also confirms that democracy, economic freedom, investment, social public spending, as well as, globalisation and information and communication technologies are influencing factors of HDI.