Corruption Contagion in South Asia and East Asia: An Econometric study

Abstract

Many studies have analyzed the economic consequences of corruption using alternative economic theories. A new area of research has recently emerged that explores how one country’s corrupt practices spread to neighboring countries. It can be reasonably assumed that corruption is shaped by the culture or climate of doing business within a particular country, and these practices are shared to some extent by the neighboring countries. It is therefore possible for corruption to spread from one country to its neighbors, but the rate of corruption contagion should diminish with greater distance. This study estimates the impact of geographical distance on corruption for 16 emerging countries in South Asia and East Asia and finds that corruption contagion indeed diminishes with geographical distance, and that the rate of contagion is lower in East Asian countries.