An assessment of the impact of corruption on poverty in Africa
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Many economists argue that corruption is the leading cause of poor economic progress and development, yet Africa being the poorest continent, has a perception of wide spread corruption. Africa only showed good economic progress in the late 1960s and then after, economic progress slowed and income levels plummeted. This prompted this paper to find out the effect of corruption on poverty in Africa. Data on GDP per capita, capital growth, education, exports, government consumption and corruption was collected for 23 African countries that have been randomly picked for the period of 13 years. Random Effects Generalised Least Squares Method was used to analyse the data in order to ascertain the effect of corruption on poverty in African states. The results confirmed the negative and significant effect of corruption on economic growth such that a 1 point decrease in corruption on a scale of 0-100 will cause GDP per capita to increase by US$9.50 across time between African countries. Capital investment, exports and government consumption are other factors that were seen to significantly affect income growth. The research also made a shocking discovery that in Africa there is a certain type viii of investment that favour high corruption and the paper termed it exploitative investment caused by state capture. However, though corruption affects growth by encouraging unproductive investments, political instability was seen to affect investment more than corruption in African states. Policies to reduce and control corruption can alleviate poverty and economies should uphold institutions that encourage mass participation in the production process in order to bail the bottom billion from out of poverty.