ESSAYS ON THE NEXUS OF CORRUPTION, ECONOMIC GROWTH, AND HUMAN DEVELOPMENT IN SUB SAHARA AFRICA

Abstract

ABSTRACT

Corruption and the rising levels of external debt are public enemy number one in Sub Sahara Africa (SSA). Corruption robs SSA of its resources and potential, cheats its people out of billions of dollars annually and has contributed to state failures, instabilities, poverty and the eruption of civil wars over resources in several African countries. The importance of a profound understanding of corruption in SSA becomes even more clear when considering its incalculable costs – especially human costs. This thesis, therefore, aims to theoretically and empirically investigate the nexus of corruption, economic growth, and human development in SSA in an effort to better understand the causes and consequences of corruption on the economic growth and human development in SSA. To achieve this aim, the thesis contains three main independent chapters (essays) in addition to a unifying introductory chapter and a concluding chapter which highlights the major findings, draws inferences, and suggests some policy directions. Numerous empirical studies have been devoted to the analyses of the causes and consequences of corruption with mixed results. Controversial results seem to be quite common when adopting different measures of corruption, different samples, or, more important, different conditioning sets. Chapter 2 looks at the relationship between government size, the police, and corruption in SSA. There are two different views on the relationship between government size and corruption with remaining ambiguity in the empirical data. This chapter, therefore, contributes to the literature by theoretically and empirically analyzing the impact of the executive branch of government and the police on corruption in SSA for the first time. By using a panel data set covering 40 SSA countries over the period 2005-2015 and the instrumental variable (IV) estimator, the study finds mixed results on the impact of government size and a statistically significant negative effect for the reliability of police. In sum, the results reveal that a 1 % increase in the reliability of police leads to a 0.11% decrease in corruption perception index. This study shows that the police, is not only a key determinant of corruption in SSA, but it also a very important force in the fight against corruption. Chapter 3 examines the impact of government size, the judicial system, and corruption on economic growth in SSA. The chapter makes contribution to the literature on the impact of corruption on growth by examining the impact of the large executive branch of governments common in SSA and the role of the judicial system. By using a panel data set for a cross-section of 40 SSA countries over the 2005 - 2015 period and the Generalized Method of Moments (GMM) estimation technique, the study finds support for the sand the wheels hypothesis, i.e., corruption impedes economic growth in SSA. In addition, this study finds size of the executive branch of government also affects economic growth significantly and these associations are mostly robust. Chapter 4 investigates the impact of external debt and corruption, and Human Development Index (HDI). This study contributes to this literature by analyzing the theoretical and empirical impact of corruption and external debt on human development in the CFA franc zone countries. By using a panel data set for a cross-section of 14 CFA franc zone countries over the 2005 to 2017 and the Generalized Method of Moments (GMM) estimation technique, the study shows that both corruption and external debt have a significant negative impact on the human development in the CFA franc region and the results are robust for various alternative specifications.