Corruption creates friction in the economic system and acts as a
barrier to economic development and progressive social change of
an economy. However, there exists conflicting views in literature
regarding the effect of corruption on development. The purpose of
our study is to investigate the effect of corruption on the economic as
well as social development of an economy. Based on a sample of
four countries in South Asia, namely, Bangladesh, India, Pakistan
and Sri Lanka for the period 1995-2015, and using the Vector Error
Correction (VEC) model and panel cointegration technique, we show
that there is a negative relationship between corruption and socioeconomic
development in the South Asian region.
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