Corruption, Economic Freedom, and Economic Growth in Sub-Saharan Africa: An Empirical Investigation

Abstract

Institutional weakness, including corruption and weak governance, has been identified as a major hindrance to economic growth in Sub-Saharan African (SSA) countries. This study investigates the relationship between corruption, economic freedom, and economic growth in SSA countries from 1996-2014 using a multivariate cointegration and error-correction framework. The study finds that economic freedom Granger-causes economic growth in the short term, while economic freedom and economic growth Granger-cause corruption in the long term. Furthermore, there is positive unidirectional causality from economic freedom and economic growth to corruption in the long term and positive unidirectional causality from economic freedom to economic growth in the short term in SSA countries. The findings suggest that good policies, quality institutions, and good governance are essential for the process of economic growth and development in the region. The study has important policy implications for SSA countries.