The Mediating Effect of Political Corruption on the Relationship between Political Stability and Economic Development: A Cross-Country Analysis

Md Abdullah-Al- Mamun

doi:10.61424/ijah.v4i2.841

Authors

Md Abdullah-Al- Mamun Associate Professor (Political Science) BCS(General Education) Khulna Govt.,College, Khulna

DOI:

https://doi.org/10.61424/ijah.v4i2.841

Keywords:

Political stability, corruption, economic growth, mediation analysis, governance

Abstract

This study investigates the mediating role of corruption in the relationship between political stability and economic development using cross-country data. Employing Ordinary Least Squares (OLS) regression and mediation analysis based on the Baron and Kenny (1986) framework, the study estimates both direct and indirect effects. The findings indicate that political stability significantly enhances economic growth, while control of corruption partially mediates this relationship. Specifically, politically stable environments reduce corruption, which in turn improves economic performance. The results highlight corruption as an important transmission mechanism linking institutional quality and economic outcomes. Policy implications emphasize the need to strengthen governance institutions alongside maintaining political stability to achieve sustainable economic development.

References

Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity, and poverty. Crown Business.

Aidt, T. S. (2009). Corruption, institutions, and economic development. Oxford Review of Economic Policy, 25(2), 271–291. https://doi.org/10.1093/oxrep/grp012

Aisen, A., & Veiga, F. J. (2013). How does political instability affect economic growth? European Journal of Political Economy, 29, 151–167. https://doi.org/10.1016/j.ejpoleco.2012.11.001

Alesina, A., Özler, S., Roubini, N., & Swagel, P. (1996). Political instability and economic growth. Journal of Economic Growth, 1, 189–211. https://doi.org/10.1007/BF00138862

Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182. https://doi.org/10.1037/0022-3514.51.6.1173

Mauro, P. (1995). Corruption and growth. Quarterly Journal of Economics, 110(3), 681–712. https://doi.org/10.2307/2946696

Mo, P. H. (2001). Corruption and economic growth. Journal of Comparative Economics, 29(1), 66–79. https://doi.org/10.1006/jcec.2000.1703

North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge University Press.

Pellegrini, L., & Gerlagh, R. (2004). Corruption’s effect on growth and its transmission channels. Kyklos, 57(3), 429–456. https://doi.org/10.1111/j.0023-5962.2004.00261.x

Rodrik, D. (2000). Institutions for high-quality growth (NBER Working Paper No. 7540). National Bureau of Economic Research. https://doi.org/10.3386/w7540

Transparency International. (2024). Corruption perceptions index 2024. https://www.transparency.org

Treisman, D. (2000). The causes of corruption: A cross-national study. Journal of Public Economics, 76(3), 399–457. https://doi.org/10.1016/S0047-2727(99)00092-4

Wei, S. J. (2000). How taxing is corruption on international investors? Review of Economics and Statistics, 82(1), 1–11. https://doi.org/10.1162/003465300558533

World Bank. (2024). World development indicators. https://data.worldbank.org/indicator/