Gdp Per Capita and Corruption
GDP Per Capita and Corruption
4/14/13
In my analysis of corruption, I chose to see how corruption affects the per capita income of families, households around the world. GDP is one of the most important factors in determining how well people in a given country live. Typically the higher the per capita GDP is, the better quality of life the people in that nation are able to derive. With less corruption throughout the world, I believe that GDP will have an easier time growing. The nation of Sri Lanka proves my point in that “in 2011 Sri Lanka has sacrificed roughly 2% of its Gross Domestic Product (GDP) growth as a consequence of corruption, according to top economist Prof. A.D.V. de S. Indraratna” (2% SL GDP Losr). The longer widespread corruption exists in the world, the more developing and underdeveloped countries fall behind both economically and socially. According to SeekingAlpha.com, “What we see is that countries with a high perception of corruption are correlated with poor economic performance.” It is hard to spur performance economically when all, or most of the direct investment in a nation is being used in places it was never intended to be. Even the IMF thinks that corruption is one of the main factors in preventing economic growth in a nation when they say that, “high and rising corruption increases income inequality and poverty by reducing economic growth…” (Gupta). I believe that there is a negative correlation between per capita GDP and corruption as shown by this simple linear regression model: Per Capita GDP=a- β(CPI) where β ≠ 0. In my analysis of GDP explained by corruption I found that almost 60% of the variation in per capita GDP can be explained by corruption. While this is not the strongest relationship, it is strong enough for me to deduce that corruption does, in some way, affect how much the average household brings home each year, like I hypothesized. With less corruption, the average household will be able to have more money to
4/14/13
In my analysis of corruption, I chose to see how corruption affects the per capita income of families, households around the world. GDP is one of the most important factors in determining how well people in a given country live. Typically the higher the per capita GDP is, the better quality of life the people in that nation are able to derive. With less corruption throughout the world, I believe that GDP will have an easier time growing. The nation of Sri Lanka proves my point in that “in 2011 Sri Lanka has sacrificed roughly 2% of its Gross Domestic Product (GDP) growth as a consequence of corruption, according to top economist Prof. A.D.V. de S. Indraratna” (2% SL GDP Losr). The longer widespread corruption exists in the world, the more developing and underdeveloped countries fall behind both economically and socially. According to SeekingAlpha.com, “What we see is that countries with a high perception of corruption are correlated with poor economic performance.” It is hard to spur performance economically when all, or most of the direct investment in a nation is being used in places it was never intended to be. Even the IMF thinks that corruption is one of the main factors in preventing economic growth in a nation when they say that, “high and rising corruption increases income inequality and poverty by reducing economic growth…” (Gupta). I believe that there is a negative correlation between per capita GDP and corruption as shown by this simple linear regression model: Per Capita GDP=a- β(CPI) where β ≠ 0. In my analysis of GDP explained by corruption I found that almost 60% of the variation in per capita GDP can be explained by corruption. While this is not the strongest relationship, it is strong enough for me to deduce that corruption does, in some way, affect how much the average household brings home each year, like I hypothesized. With less corruption, the average household will be able to have more money to
Cited: "2% SL GDP Growth Lost Due to Corruption." Sunday Times. N.p., 5 Feb. 2012. Web. 13 Apr. 2013. <http://www.sundaytimes.lk/120205/BusinessTimes/bt19.html>. "GDP per Capita vs. Corruption." Seeking Alpha. N.p., 2 June 2011. Web. 13 Apr. 2013. <http://seekingalpha.com/article/272968-gdp-per-capita-vs-corruption>. Gupta, Sanjeev, Hamid Davoodi, and Rosa Alonso-Terme. "Does Corruption Affect Income Inequality and Poverty." International Monetary Fund. N.p., May 1998. Web. 13 Apr. 2013. <http://www.imf.org/external/pubs/ft/wp/wp9876.pdf>. Svennson, Jakob. "Eight Questions About Corruption." World Bank. N.p., June-July 2005. Web. 13 Apr. 2013. <http://www1.worldbank.org/publicsector/anticorrupt/Svensson%20Eight%20Questions%20About%20Corruption%20(JEP%20Vol%2019,%20No%203%202005).pdf>. GDP Data Found "GDP Per Capita." CIA Fact Book. N.p., n.d. Web. 16 Apr. 2013. <https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html>.