Corruption, income inequality and decline in South Asia

By using panel data over the 2001-2016 time-period, this study investigates the dynamic relations between corruption, income inequality and the decline in South Asia. Namely, the panel data are subjected to the Chow probability test, the fixed-effect model, random-effect GLS regression and the Hausman test. The empirical results show that economic growth is adversely affected by income inequality, i.e., they show the significant effect of the Gini coefficient on economic decline. It is evident that income maldistribution leads to decline, yet corruption seems to have a positive effect on economic growth. Despite its limitations, the study yields both future-research directions and policymaking recommendations toward curbing the decline in South Asia.