EFFECT OF GLOBALIZATION IN A CORRUPT ECONOMY: EVIDENCE FROM NIGERIA

Joseph, Afolabi Ibikunle and Bamidele, T.B

Department of Economics

 Ajayi Crowther University, Oyo, Oyo State

E-mail: toy4kuns@yahoo.com and timothydele@yahoo.co.uk

ABSTRACT

This study explores the channels through which globalization engender corruption an acts as an impediment to achieving the economic growth in Nigeria. The Structural Vector Auto Regression (SVAR) estimation technique is used to test this relationship. The variables used include Gross Domestic Product (GDP) growth rate, Openness (proxy by index of export plus index of import divided by GDP and corruption perception index. The scope covers the period 1970 to 2010.   It was discovered that globalization engender corruption which in turn impacted negatively on economic growth. The impulse response results indicate that globalization accounts for negative shocks in the economy via its effects on corruption, while the Forecast Variance Decomposition show that corruption accounts for a substantial portion of the variance decomposition of the variables under study. Hence, there is need to tackle corruption seriously if the country must achieve the essential benefit of globalization.

Keywords: Globalization, Corruption, Corrupt Leaders, Openness and Growth Rate