Drivers of Corruption

Abstract

Corruption has been a severe issue for underdeveloped and developing countries. So many studies have been conducted to understand the phenomena and to identify the factors but there are mixed reviews. According to the 2015 Corruption Perceptions Index reported by Transparency International Pakistan is the 117 least corrupt nation out of 175 countries. Other nearby countries are also adversely affected by it. The focus of this study is to find out those factors which significantly effects the corruption. For that purpose 7 independent variables are taken in the study which includes Foreign Aid, Educational Attainment, Economic Development, Rule of Law, Political Stability and Economic Freedom. The sample includes the data of 5 countries Pakistan, India, Bangladesh, Afghanistan and Iran. The data for the years 1996-2014 is use. There are total 80 observations. Using multiple linear regression the summary of the coefficient tables shows that economic development, rule of law and political stability are significant and all other independent variables are not significant. Slopes for all the independent variables are positive which means that the improvement in any of the variables will reduce corruption.