DOES CORRUPTION NEGATIVELY IMPACT ECONOMIC GROWTH OF A COUNTRY? EVIDENCE FROM BRIC COUNTRIES

Abstract

The objective of this research is to investigate the impact of Corruption, FDI and Investments on Economic Growth (GDP). This study explains the vigorous relation between the variables that is corruption, FDI and economic growth in BRIC Countries includes: Brazil, Russia, India, and China. The Secondary data in this study is sourced from Transparency International (Corruption Perception Index) and (World Bank) Statistics database. The data period ranges from 1998 till 2017.This study uses time series to examine the casual relationship, therefore Unit root tests and panel least square regression are applied. The results illustrates that there is a negative and significant relationship between economic growth (GDP) and corruption, which mean that whenever corruption increases, GDP shall be decreased. However, when corruption decreases, the GDP will be increased. The results shows that the relationship between GDP and FDI is positive and significant. The results indicate that when FDI increases, it will increase GDP and vice versa. The results shows that the relationship between GDP and domestic investment is positive and significant. This research can also be utilized by government representatives to review how corruption and political stability become obstacles for country growth and deters the inflow of investments in a country. This is first and latest research to investigate the impact of Corruption, FDI and Investments on Economic Growth (GDP) on BRIC countries. This study provides as growing literature to explore the studies regarding the determinants and consequences of corruption driving diverse outcomes.