The Impact of Corruption and Liquidity Control on Economic Growth in Selected Developing Countries

Nowadays the corruption is a problem that is faced by all countries, whether developed or less developed.. On the other hand, the stability of liquidity are the main factor of economic stability. Uncontrolled growth of liquidity leads to higher speculative demand for money and growth of non-productive sectors in economy and the corruption occurs in such condition.
Due to the relationship between liquidity and corruption and their effects on economic growth, this paper is aimed to investigate the impact of controlling corruption on GDP through liquidity channel. In this study, GMM dynamic panel method for 31 selected developing countries is used. The results of estimation for the period 2002 -2012 indicates that Control of corruption in developing countries has a positive and significant impact on economic growth. Also in situation of Simultaneous increase in Control of corruption and Liquidity, increasing of Liquidity can improve economic growth via more Control of corruption. Moreover results indicate that increasing of globalization and per capita capital has a significant positive effect on economic growth.