Relationship of Corruption, Property Rights and Democracy: Evidence of Developing Economies

Corruption is a phenomenon of economic, political and cultural disorder, with more or less hazardous effects both in developed and developing countries. In this regard, North and colleagues emphasize that only in an open access system (democracy), corruption is controlled and other measures such as improving property rights, although they play an important role, but not enough to reduce significant corruption. As this phenomenon is considered one of the most important barriers to growth of developing countries such as Iran with resistance approaches to economy, therefore need to know the roots and deal with it has become seriously considered as country's development goals. The purpose of this study was first designed to identify the phenomenon of corruption in a general equilibrium analysis, and then to investigate the relationship of corruption, property rights and democracy, based on evidences from developing economies. For this purpose, a panel model is used to analyze relevant data from 53 selected developing countries for the period of 1996 and 2013. The results indicated a significant negative effect of democracy (-0.49), property rights (-7.56) , economic growth (-0.37) and investment (-5.75) on the level of corruption. Moreover, the Gini coefficient of inequality (0/36) and political instability (19.4) showed a significant and positive effect on the corruption index in selected economies. While the results have also shown, by increasing the degree of democracy and property protection as a new variable in the model, the relationship between corruption and democracy has increased, which shows that the impact of democracy on corruption is empowered with the property property protection variable.