Corruption, Institutional Quality, and Economic Growth: A Dynamic Panel Analysis of Emerging and Transition Economies

The multifaceted relationship between corruption and economic expansion remains a highly contested domain in macroeconomic literature. This study systematically investigates the interactive and non-linear effects of corruption and overarching institutional quality on GDP per capita growth. Utilizing a comprehensive panel of 10 structurally diverse emerging and transition economies—including Uzbekistan, Poland, Turkey, Brazil, and Vietnam—from 2010 to 2023, the research integrates primary macroeconomic indicators from the World Bank and governance metrics from Transparency International. By employing a Two-Step System Generalized Method of Moments (System GMM) to rigorously control for dynamic endogeneity and reverse causality, the findings firmly reject the monolithic "sand in the wheels" paradigm. Instead, the empirical evidence demonstrates a profound institutional threshold effect: bureaucratic rent-seeking acts as a severe impediment to capital accumulation strictly in environments plagued by weak governance. Conversely, robust regulatory quality and judicial independence critically mitigate these distortionary impacts.