Education and Corruption: a Stochastic Frontier Analysis: Evidence from Developed and Developing Countries

The objective of this paper is to explain how a political institution (corruption) affects the efficiency of educational expenditure as an essential component of the knowledge economy. We applied a stochastic frontier analysis method to our sample of 35 developed and 40 developing countries over 16 years from 2000 to 2015. Using two proxies of corruption based on Transparency International and Worldwide Governance Indicators databases, we empirically demonstrated that corruption can mainly affect the expenditure distortion on education. We found strong evidence of the negative impact of corruption bias on the education technical efficiency expenditure, especially for the developing countries. One of the main goals of the developed and developing countries’ governments is the reduction of corruption to ensure better education and knowledge economy, educate the population, and train specialists which are needed to stimulate economic growth by optimizing the resources of government.