Corruption, FDI and Growth: All the truths of a corrupted regime before and after the social upsurge in Tunisia

The aim of this paper is to investigate the dynamic relationship between corruption, investment and economic growth in Tunisia within a multivariate framework. In the empirical section we use data span from 1976 to 2013 and we perform a vector error correction model and cointegartion technique to detect causality between corruption, investment, economic growth, credit to the private sector and foreign direct investment. The main findings of this paper show that corruption hampered Tunisia economic growth in the short-run and the long run as well. Corruption could be the main reason of the slowdown of investment activities and the low inflow of capital. Another important conclusion was revealed in this paper is that corruption get worsened in the period that follows the social upsurge of December 2010. Therefore, the main goals of the so called “revolution” are from being achieved yet. Hence, more works are needed to fight corruption in Tunisia.