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Shadow Economy, Corruption, and Economic Growth: A Bayesian Analysis

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Financial Econometrics: Bayesian Analysis, Quantum Uncertainty, and Related Topics (ECONVN 2022)

Part of the book series: Studies in Systems, Decision and Control ((SSDC,volume 427))

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Abstract

The objective of this paper is to analyze the impact of shadow economy and corruption on economic growth. The data were collected from 10 ASEAN countries in the period 2002–2019, including: Brunei Darussalam, Indonesia, Cambodia, Lao PDR, Myanmar, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. The Bayesian method is used to estimate the research model. This method is an approach with many outstanding advantages but it is rarely utilized in empirical studies. The results show that economic growth is negatively impacted by shadow economy and is positively impacted by corruption control. In other words, the existence of corruption impacts negatively on economic growth. The probabilities of these impacts are 96.36 and 100%, respectively. Accordingly, shadow economy hinders economic growth, while less corruption can significantly improve economic growth. In particular, this study found a negative but rather low impact of the interaction variable between shadow economy and corruption control on economic growth, with the impact probability of 78.32%. This indicates that improving the level of corruption control can help limit the negative impact of shadow economy on economic growth in ASEAN countries, which is an interesting finding of this study. In addition, this study also found a significant impact of the control variables of domestic credit, government expenditure, foreign direct investment, population growth, and inflation on economic growth.

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Authors and Affiliations

  1. Faculty of Finance and Banking, University of Finance – Marketing (UFM), Ho Chi Minh City, Vietnam

    My-Linh Thi Nguyen

  2. Faculty of Finance and Banking, Industrial University of Ho Chi Minh City (IUH), Ho Chi Minh City, Vietnam

    Toan Ngoc Bui, Tung Duy Thai & Thuong Thi Nguyen

  3. School of Business and Management, RMIT University, Ho Chi Minh City, Vietnam

    Hung Tuan Nguyen

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  1. My-Linh Thi Nguyen
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  2. Toan Ngoc Bui
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  3. Tung Duy Thai
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  4. Thuong Thi Nguyen
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  5. Hung Tuan Nguyen
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Correspondence to Thuong Thi Nguyen .

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Editors and Affiliations

  1. Banking University of HCMC, Ho Chi Minh City, Vietnam

    Nguyen Ngoc Thach

  2. Department of Computer Science, University of Texas at El Paso, El Paso, TX, USA

    Vladik Kreinovich

  3. Banking University of HCMC, Ho Chi Minh City, Vietnam

    Doan Thanh Ha

  4. Banking University of HCMC, Ho Chi Minh City, Vietnam

    Nguyen Duc Trung

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Nguyen, ML.T., Bui, T.N., Thai, T.D., Nguyen, T.T., Nguyen, H.T. (2022). Shadow Economy, Corruption, and Economic Growth: A Bayesian Analysis. In: Ngoc Thach, N., Kreinovich, V., Ha, D.T., Trung, N.D. (eds) Financial Econometrics: Bayesian Analysis, Quantum Uncertainty, and Related Topics. ECONVN 2022. Studies in Systems, Decision and Control, vol 427. Springer, Cham. https://doi.org/10.1007/978-3-030-98689-6_49

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