Corruption suppression and domestic investment of emerging economies: BRICS and CIVETS groups – panel ARDL approach

Abstract

Purpose

This paper aims to examine the effects of corruption control on domestic investment in the BRICS and CIVETS of emerging economies. This paper’s primary goal is to investigate how corruption has impacted domestic private investment in BRICS and CIVETS, empirically evaluate that impact and offer appropriate policy recommendations.

Design/methodology/approach

This paper uses secondary panel data from the World Bank spanning the period 2000–2020. The data covered the BRICS and CIVETS countries between 2000 and 2020. This study used gross domestic product (GDP) per capita growth, broad money as a percentage of GDP, real interest rate and corruption index as independent variables and domestic investment as a percentage of GDP as a dependent variable.

Findings

The significant results are presented using the panel, autoregressive distributed lag pooled mean group estimator. Growth in the per-capita GDP, money supply and the suppression of corruption all have long-term, positive and significant benefits on domestic investment. Comparatively, the real interest rate has a significant negative influence on investment, indicating that it may be necessary and beneficial to adopt anti-corruption measures to promote domestic investment. However, the country-specific analysis reveals that the long-term effects of corruption on investment tend to vary across countries, indicating that each country needs to research the issue of corruption independently. Finally, ensuring optimal levels of money supply and interest rates leaded by further control of corruption is necessary for strengthening the investment environment.

Originality/value

This study suggests several practical implications. For example, legislators and policymakers should pay more attention to anti-corruption policies. Central banks should put more effort into controlling the interest rate.

Citation

Magableh, S., Hailat, M., Al-qalawi, U. and Al Qudah, A. (2024), "Corruption suppression and domestic investment of emerging economies: BRICS and CIVETS groups – panel ARDL approach", Journal of Financial Crime, Vol. 31 No. 1, pp. 174-187. https://doi.org/10.1108/JFC-11-2022-0290