A Spatial Dynamic Panel Analysis of Corruption

Previous works on the determinants of corruption seldom addressed cross-border spillover of corruption in cross-country panel studies. In this paper, we report evidence of spatial spillover of corruption by means of spatial dynamic panel model. The results confirm that perceived levels of corruption at the country level are statistically and positively related to those in neighbouring countries. Furthermore, the findings also suggest that the parameters estimates derived from the spatial dynamic panel are more precise compared to the system GMM.