THE RELATIONSHIP OF CORRUPTION AND ECONOMIC GROWTH

Abstract

The purpose of this study was to reveal the relationship between corruption and economic growth. The method used in this
study was the pooling data. Number of cross-section data were14 countries and times-series data werenine years. The best
model obtained from redundant fixed effect test, correlated random effects-Hausman test and technical consideration. The
model was fixed effect model. Based on regression output, corruption havepositif significant to 12 Asia Pasific countries
economic growth. So, corruption are not become a grease of wheel for economic that countries. If corruption (corruption
perception index/CPI) increase, economic growth increase too. While, other variables like FDI, and government budget for
healthy have positive significant to the economic growth. Actually, onlyfivecountries in which the CPI variable
significantly to economic growth. Two countries have positif significant (Japan and Korea) and anotherhave negatif
significant (Brunei Darussalam,Timor Leste, and Kamboja).

Keywords: CPI, economics growth, pooling data, none, fixed, and grease of wheel