The Destructive Effect of Corruption on Economic Growth in Mali : a Nonlinear Model Analysis

Abstract

A growing body of empirical work has raised awareness of the destructive effect of corruption on economic development, although no existing study has considered the threshold value at which corruption impedes economic growth. This study assesses the effect of corruption on economic growth by adopting a non-linear approach to determining the corruption threshold. By analyzing the effect of corruption on economic growth in Mali over the period 1988 to 2021, this study examines whether there is evidence of an inverted U-shaped relationship between economic growth and corruption. The threshold effect of corruption is assessed using an augmented quadratic model. The results confirm the existence of an inverted U-shaped relationship between corruption and economic growth on the one hand and show the existence of a long-run relationship between these variables on the other hand, thus validating our initial hypothesis. Furthermore, the results show that economic growth peaks when the corruption perception index reaches 0.07 points. The main lessons to be drawn from these results are that below this threshold, corruption becomes a lubricant for economic growth, while above this threshold, it constitutes a brake on economic growth in Mali.