Quantitative Analysis of Corruption’s Impact on Economic Growth in Albania

Introduction

This article presents a quantitative analysis of the impact of corruption on economic growth in Albania using panel data from 2005 to 2014.

Corruption Perceptions Index (CPI) and Economic Growth

Results

• Heteroskedasticity Test: The null hypothesis that there is no heteroskedasticity in the residuals cannot be rejected.
• Estimated Equation: Growth = 12.15 - 2.545 CPI
  • A one-point increase in corruption perceptions decreases economic growth by 2.545%.
• Model Performance: R-squared value of 0.12 indicates that only 12% of the sample variation in growth can be explained by the CPI.
• Statistical Significance: F-statistic and probability value suggest that the independent variable (CPI) does not have a significant effect on the dependent variable (growth).

Ramsey RESET Test

Results

• The test suggests that there is no evidence of omitted variables or functional form misspecification.

Conclusion

The results of this analysis suggest that corruption perceptions may not have a significant impact on economic growth in Albania, at least based on this analysis. However, the following concerns should be noted:

• Sample Size: The sample size (10 observations) is relatively small.
• Limited Explanatory Power: The R-squared value of 0.12 indicates that other factors may be more important drivers of economic growth in Albania.

Further research is needed to fully understand the relationship between corruption and economic growth in Albania.