All Theses and Dissertations

Student Number

09019

Degree

Master of Science in Economics

Department

Department of Economics

Date of Award

Fall 2017

Advisor

Dr. Mohammad Nishat

Second Advisor

Dr. Walliullah

Committee Member 1

Dr. Mohammad Nishat, Institute of Business Administration, Karachi

Committee Member 2

Dr. Walliullah, Institute of Business Administration, Karachi

Project Type

Thesis

Access Type

Restricted Access

Document Version

Final

Pages

ix, 38

Subjects

Economics

Abstract

This research empirically tests the impact of trade openness along with political openness and quality of openness index on corruption. A dynamic panel data set spanning over 19 years with 29 cross-sections is utilised for this purpose. Generalised method of moment technique is employed for the estimation of results to tackle the issue of endogeneity. Two data sets of corruption perception indices are used to check the sensitivity of estimates to the selection of corruption perception data. In addition, the analysis is carried out once for the entire sample of counties then, it is replicated for three subsamples are made on the basis of income classification by the World Bank. Empirical results support the inverse relationship of trade openness and corruption but results are not robust to selection of multiple indices for corruption perception measures. Press freedom, long term exposure to democracy, Quality of Openness Index and Per Capita Gross Domestic Product have robust results. More freedom to the press in a country and longer duration of democracy leads to higher probability of a country to have lower levels of corruption. In addition, higher Per Capita Gross Domestic Product leads to lower levels of corruption as expected. However, Quality of Openness Index remains insignificant throughout the analysis implying that doing trade with less corrupt partners does not have an impact on corruption levels of importing country. Regarding government size, the variable is negatively related to corruption in the case of higher and upper middle income economies; however, it is positively related to corruption for the lower income economies. Furthermore, results for the current level of democracy are inconclusive.

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