Corruption a bid to be able to assign or

Corruption as one
of major factors which have slow down economic growth and development in
Nigeria has also deterred political and economic reforms which have undermined
efforts to improve the living standards of Nigerians and to foster democratic
governance.  It is evident that the
majority of Nigerians see corruption as a serious problem today and most public
agencies are rated low in terms of honesty and integrity. Consequently, the
factors that drive corruption become pertinent. So, this study examined the
effect of corruption on economic growth in Nigeria using fully modified OLS
regression technique. Our empirical
analysis confirms that in the long run, corruption is negatively related to
economic growth which retards economic
growth directly and indirectly by increasing poverty and restricting investment.
The study recommends among other
strategies the implementation of stiff penalties such as stringent punishment
for those convicted of corrupt acts in our law courts, promotion of poverty reduction
programmes and an enabling environment for inward investments.

 

Keywords:
Corruption, economic growth, FDI, Transparency International, Trade openness

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Section
One

Introduction

Corruption
is a social menace that has permeated into every facet of the society and considered
a strong constraint on growth and development. Corruption also deters growth
because it undermines the rule of law, the legitimacy of the state, the stability
of the institutions, and the moral foundations of society (Doig and Theobald,
2000). Therefore, corruption is a bane to the developmental efforts of
successive government in Nigeria. Specifically, corruption is noted to have been
responsible for the non-execution of projects and programmes that would have
helped in reducing the sufferings of Nigerians (Bello and Lamidi 2009). Many laudable
and capital-intensive projects/programmes enacted or started by preceding
leaders have been disregarded or neglected by their successors in a bid to be able
to assign or approve new or fresh ones due to selfish intentions for financial
gains. So, corruption has been identified as the major factor responsible for Nigeria’s
underdevelopment.

The
most topical issue in the governance of contemporary Nigerian nation is
probably accountability and transparency in the handling of public funds.
Accountability is a central part of governance which is characterized by
foreseeable, open and enlightened policy-making (i.e. transparent process).
Transparency promotes good governance and transparent decision making is
crucial for the public sector in making sound decisions for better performance
(Afolabi 2004). Kolade (2012) asserted that the abuse of authority and
privilege of office; the absence of a culture of accountability; and the
inadequacies of stakeholders’ dynamism could all hinder true/good governance.

Specifically,
corruption has caused huge hindrance to national development in terms of greed
among the political leaders largely characterized by embezzlement and misappropriation
of public funds, cheating, bribery, forgery, impersonation, rigging, hoarding of
voters cards, multiple voters’ registration, etc. which has constituted a huge
impediment to development in Nigeria (Dagaci 2009). Corruption is one of the
greatest threats to good governance today because it slows down economic growth
and investment. (Iyoha, et al 2015). It is a social problem which hampers
development and robs people of the chances for any significant economic as well
as social advancement (Okeyim, Ejue, & Ekanem 2013).

Obasanjo
(2009) also observed that since the First Republic of Nigeria the cause of
political instability has been as attributed to high level of corruption which successive
government tried to eradicate. Unfortunately, the situation is becoming worse
every day. More so, Nigeria’s external image becoming more denting, as the country
remained on the lowest rung of corruption index. Economic growth and development
in Nigeria for over twenty years has been soiled with misappropriation and embezzlement
of funds even with the return of democracy, turning the country’s economy into
an underdeveloped nation with least position in international ratings (Abullahi
2009). The Corruption Perception Index (2013) published by Transparency
International shows that Nigeria occupies the 144th position in the world. This
plunged downward further from the 137th out of 177 countries surveyed in 2012.
However, Nigeria was ranked as the 136th most corrupt country in the world in
2014, an improvement on the position of 2013 by eight places.

Furthermore,
the Economic and Financial Crimes Commission (EFCC) and Independent and Corrupt
Practices Commission (ICPC) are getting worried whether it will be possible to
eradicate corruption in Nigeria due to the high level of lootings by political
office holders, civil servants and private businessmen. With the catalog of
these problems in Nigeria, this study attempts to examine the effects of
corruption on economic development in Nigeria.

To
achieve this broad aim, the remainder of this paper is organized as follows: section
2 is conceptual framework; section 3 outlines the empirical estimation methods
while section 4 presents the results. Section 5 concludes the paper.