Causality between Corruption and Poverty: An application to Western Balkan countries

Abstract

The main goal of this article is the investigation of the causal relationship between poverty and corruption in Western Balkan countries. The considered time period is from 2013 to 2021. The vast majority of empirical papers have shown a negative correlation between corruption and economic growth, or between the corruption index and poverty indicators; countries with less corruption experience more economic growth and less poverty. Higher levels of corruption are also related to a higher economic, financial and social inequality, and to a higher number of people living above the poverty line. Corruption discourage foreign direct investments, compromise the quality of public services and infrastructure, and reduce tax revenues.