Author(s): Dorcas Gonese
Theories positing that corruption can either grease or clog the wheels of processes leading to economic progress have made the effect of corruption on growth uncertain across economies. In light of the ongoing debates concerning this phenomenon, the current study evaluates the economic growth effects of corruption. It incorporates institutional quality as a mediating factor within the growth-corruption nexus in Southern African Development Community (SADC) countries between 1980 and 2020, utilising the pooled mean group (PMG) estimation method. The results demonstrate a detrimental influence of corruption perception on growth. Conversely, the impact of corruption on GDP shifted direction when government effectiveness and voice accountability were accounted for in the analysis. The findings also reveal that the institutional quality indicators have a disparate moderating effect on the growth-corruption nexus. This result underscores the necessity for SADC governments to consider and treat institutions separately in the economic growth-corruption policy discourse. More so, the empirical results indicate that employment and inflation negatively impact trade openness, and political stability positively impacts economic growth.