Abstract

This paper investigates the determinants of corruption and the effects of certain variables on corruption. The variables that have marked incidence of corruption are, among others, increases in imports, in the shadow economy, self-employment, the interest rate, and the trade deficit, while corruption has a negative incidence on economic growth, exports, wage employment, and productivity, and others. Using principal component analysis new indicators of corruption and anti-corruption were developed, which were validated by comparing them with the World Bank’s control of corruption index. The paper presents the main elements of a regional strategy to combat corruption and ends with a series of conclusions.

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