Transformations  in
Business & Economics

THE IMPACT OF CORRUPTION ON ECONOMIC GROWTH IN THE COUNTRIES OF SOUTHEAST EUROPE
Minja Simovic

ABSTRACT. Increasing attention is being paid to researching the economic aspects of the corruption phenomenon and its impact on many macroeconomic indicators. Unlike developed Western economies, the relationship between corruption and economic growth is insufficiently explored in transition countries. The subject of research in this paper is the relationship between corruption and economic growth in three selected countries of Southeast Europe (SEE): Montenegro (MON), Bosnia and Herzegovina (B&H), and Serbia (SER). The aim of this paper is to show that this relationship is significant and needs to be addressed urgently. The starting point is the hypothesis that corruption has a largely negative impact on economic growth in the SEE countries, that is, the mentioned variables are inversely proportional (i.e. high levels of corruption in the observed countries significantly cause low economic growth). It is also assumed that the impact of corruption on economic growth is essentially direct and can be realised without any significant delay. In methodological terms, the corruption perceptions index (CPI) and the amount of gross domestic product (GDP) per capita are used to make an econometric model for determining the investigated impact. The time period covered by the research is from the beginning of 2003 to the end of 2018. Multiple linear regression and comparative analysis were applied in the data processing. The results of the research confirmed the initial hypothesis and significance of the set model for explaining the impact of corruption on economic growth in the SEE countries .

KEYWORDS:  corruption, corruption perceptions index (CPI), economic growth, gross domestic product (GDP) per capita, countries of Southeast Europe.

JEL classification:  D73, F43, O47.