The Corruption Trap in Africa

Sara El Asy

Abstract
The relationship between corruption and economic development remains controversial, with one strand of literature arguing that "corruption sands the wheels of economic development" and another that "corruption greases the wheels of development.” This paper contributes to the literature on the corruption trap by assessing its causes and consequences using unbalanced panel data for 40 African countries during the 1995-2019 period. The empirical findings reveal evidence of the persistence of corruption in Africa. Granger Panel Causality tests highlight that development levels and economic freedom have bi-directional causality with corruption, while there is a unidirectional causality going from corruption to development assistance level, globalization, inequality levels, CO2 emissions, and the natural resources rents. Hence, the difficulty of changing the high corruption equilibrium in Africa and other developing regions is associated with its persistence on the one hand and its causes and consequences on the other, which must be incorporated to create effective anti-corruption policies.

Keywords
perceived corruption, economic development, grease or sand the wheel
hypothesis; Trap, granger causality, panel data, Africa