Estimation of perceived corruption effect on economic growth in Serbia via an ARDL-ECM model

As part of the cycle of lectures by new researchers at the Institute of Social Sciences, Vasko Kelić, a Researcher Trainee from the Centre for Economic Research, held a lecture on December 5, 2023 in the Great Hall of the Institute of Social Sciences on the topic „Estimation of perceived corruption effect on economic growth in Serbia via an ARDL-ECM model”.

The lecture was devoted to the effect of corruption and other selected relevant variables on economic growth in Serbia between 1998 and 2022. In order to estimate the effect in question, the autoregressive distributed lag model (ARDL), along with the associated error-correction mechanism model (ECM), were applied. Along with the corruption variable, which is based on the values of Transparency International’s corruption perceptions index (CPI), model comprises the following variables: lagged values of GDP per capita, gross fixed capital investment, public expenditure as a percentage of GDP, and various kinds of proxy variables for human capital such as public expenditure on education, average PISA results, and mean number of years of schooling.

Contrary to expectations, obtained results from several model specifications show statistically significant effect of corruption on economic growth in Serbia, which suggests the existence of certain mechanisms postulated by the ,,greasing the wheels” hypothesis.

During the discussion, it was pointed out that in developed countries, a low rate of corruption can have a positive impact on the country’s economic growth, while, on the other hand, a pronounced rate of corruption slows down economic growth. At the end of the lecture, it was concluded that corruption certainly has a bad effect on the country’s economic development.

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30. 11. 2022.

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