The pioneer evidence of contagious corruption

We investigate the corruption contagion phenomenon using both the spatial econometric model as well as the dynamic panel GMM approach, employing data on 109 countries from 2002 to 2013. The Moran index supports the spatial corruption autocorrelation among sample countries, while the Moran scatter clearly plots a positive relationship between national corruption and corruption of that country’s neighbors. Our empirical evidence not only confirms contagious corruption through geographic boundaries in our sample countries, but that it also spreads out even for countries having similar levels of GDP per capita and democratic institutions. The policy implication is that controlling corruption is not just the responsibility of a specific country, but also a part of synergistic governance worldwide. We also note that similar degrees of income levels and political systems actually play an important role in corruption diffusion, but traditional works unfortunately ignore them.