Comments on economics, mystery fiction, drama, and art.

Wednesday, May 01, 2013

Generating the Wealth of Nations 3: Corruption and Economic Growth

One of the arguments that comes up when people discuss culture and/or institutions, and their reationship to economic growth, is that corruption represents a barrier to growth.  The Heritage Foundation (and don't get me started about that organization) includes an index of "Freedom from Corruption" (higher scores = less corruption) as a component of their "Index of Economic Freedom."  What I have here is a chart showing the relationship (purley correlation; I do not mean in any way to suggest causation) between the Heritage Foundation's "Freedon From Corruption" index in 2012 and the average annual rate of growth in real GDP per Capita for about 190 countries from 2005 to 2011.
(Heritage Foundation Index data here; real GDP per Capita data here).

(Click to enlarge image.)

Two things.  The solid line is the plot of a linear regression of growth in real GDP per Capita (dependent variable) on the Index.  The R-squared is small (about 0.04).  And the relation suggests that a higher index (less corruption) is associated with (remember, I do not mean to suggest causation) slower growth. 


Post a Comment

<< Home