Proceedings of 24th International Business Research Conference
12 - 13 December 2013, Planet Hollywood, Las Vegas, USA, ISBN: 978-1-922069-37-5
Corruption, Provision of Public Good, and Share of Government
Expenditure: Evidence from Emerging Economies
Rattaphon Wuthisatian
The purpose of this paper is to investigate the impact of corruption
on the share of government expenditure, related to provision of
public goods. The paper has organized into two channels. First,
the paper provides theoretical analysis applying “the Samuelson
rule of public good provision” to illustrate how the expenditure
share distorted by corruption government can hypothetically lead
to underprovided public goods in some sectors. Second, the paper
empirically examines how corruption activities can influentially
distort the share of government expenditure (in sector of health,
education, and military) in emerging economies, 39 countries, for
the period of 1999-2010. The results suggest that corruption
activities increase the expenditure share on military, whereas
these dishonesty actions lead to a significant reduction decrease
the expenditure share on health and education. These results are
significant and robust across a variation of econometric models,
including Ordinary Least Square (OLS), fixed effect, random
effects, and the inclusion of government decentralization in a set of
control variables.
Keywords: Corruption; government expenditure; public goods; emerging economies
JEL codes: H5, H7, D73, O57
Name of the track: Economics
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Rattaphon Wuthisatian, Department of Economics, University of Nevada, Reno, Reno, NV 89557,
Tel: 361-696-0448, zom_ci@hotmail.com