Does Control of Corruption Sand or Grease the Wheel of Human Development? Evidence from Panel Threshold Analysis

Abstract

This paper applies the panel threshold regression analysis to investigate the potential non-linear relationship between control of corruption and human development. Pass studies fail to investigate the dynamics in the corruption-human development relationship. Using a sample of 163 countries from 2000 to 2017, the results indicate that a decline in corruption initially improves human development but after a threshold level of human development, control of corruption reduces human development. Explicitly, the results suggest that control of corruption might grease the wheel of human development in countries with low HDI and sand the wheel in countries with high HDI. We also find that political stability, government effectiveness role of law, regulatory quality, research and development and urbanisation improve human development whereas an increase in the prevalence of anaemia and smoking reduces human development.