Corruption and Economic Growth: An Asymmetric Relationship Across Economic Levels and Legal Origins

The purpose of the study is threefold. First, it evaluates the direction and magnitude of corruption on economic growth. Second, it tests the hypothesis of asymmetric impact in developed and developing economies. Third, it investigates the corruption-growth relationship across Legal-Origins. The research employs annual data for 152 countries over the period 2012-2021 and utilizes three-panel regression approaches: pooled OLS, cross-sectional fixed effect, and random effect. Given the empirical statistical results of the F-test, Breusch-Pagan LM test, and Hausman test, the fixed effect approach is superior. The results reveal that (1) the overall corruption deteriorates the economic growth, (2) the effect is twice as harmful in developing than in developed economies, and (3) the influence varies across Legal-Origins. Economic growth is adversely affected by Corruption in French and German civil law countries, and it does not affect British common law economies and Scandinavian legal origin. The introduction of non-universality in the corruption-growth linkage presented in the paper has implications in academic and public policy domains.