The Role of Control of Corruption and Quality of Governance in ASEAN: Evidence from DOLS and FMOLS Test

Figures & data

Figure 1. Corruption as IV.

Figure 2. Corruption as DV.

Table 1. Sources of data collection

Variables	Time Dimension	Operational Definition	Measurement
Control of Corruption (CoC)	Series 1996 −2017	Control of corruption measures the extent to which public and private power is exercised for private gain. According to TARNOFF (2009), Control of Corruption measures includes both petty and grand corruption types involving both the public and private sectors. Control of corruption also measures the nations’ policy and institutional framework’s strength and effectiveness to avoid and fight corruption	Index with a score −2.5 to 2.5 provided by WGI (Worldwide Governance Indicators)
Quality of Governance (QoG)	1984 −2017	Quality of Governance. According to the World Bank, good governance quality is measured by the implementation potential of a country’s governance principles, providing the basis for business development and economic growth (KAUFMANN et al., 1999, KAUFMANN et al., 2005)	Gothenburg University of Sweden
Gross Domestic Product per capita (GDPC)	1984 −2017	GDP per capita is gross domestic product divided by midyear population. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the products’ value. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Data are in constant 2010 U.S. $.	World Development Indicators (WDI)
Government Expenditure (GOVE)	1984 −2017	General government final consumption expenditure (formerly general government consumption) includes all current government expenditures for purchases of goods and services (including employee compensation). It also includes most expenditures on national defense and security but excludes government military expenditures that are part of government capital formation.	World Development Indicators (WDI)
Human Capital (HC)	1984 −2017	The human capital index is based on years of schooling and assumed returns. The Human Capital Index is measured in terms of the productivity of the next generation of workers relative to the benchmark of complete education and full health, the units of the index have a natural interpretation: a value of x for a country means that the productivity as a future worker of a child born in a given year in that country is only a fraction x of what it could be under the benchmark. It has a score ranging from 0 to 1. “0” means a low level of the human capital index, and “1” means a high level of the human capital index.	World Development Indicators (WDI)

Table 2. Descriptive statistic

Variable	Obs	Mean	Std. Dev.	Min	Max
Control of Corruption	152	−.0774	1.0228	−1.6728	2.3255
Index of Quality of Governance	272	64.4831	14.1275	27	89.125
Government Stability	271	8.1416	2.3427	1	11.5
Socioeconomic condition	271	7.3230	2.3865	1	11
Investment Profile	271	7.5385	2.5704	0	12
Internal conflict	271	8.9881	2.2807	2.5833	12
External conflict	271	10.2358	1.3276	6	12
corruption	271	2.7267	1.2020	0	6
Military in politics	271	3.2533	1.7750	0	6
Religious tensions	271	3.9322	1.4553	1	6
Law and order	271	3.7127	1.2523	1	6
Ethnic tensions	271	3.7693	1.5029	0	6
Democratic accountability	271	2.7799	1.6212	0	6
Bureaucracy quality	271	2.3195	1.1391	0	4
GDP per Capita	272	11,079.71	15,200.45	187.4661	57,378.86
Government Expenditure	272	12.2855	5.3029	5.4652	29.8672
Human Capital	272	2.2856	.4569	1.3333	3.9742

Table 3. Correlation Analysis

	CoC	QoG	GDPC	GE	HCI
CoC	1.0000
QoG	0.84***	1.0000
	0.0000
GDPC	0.87***	0.69***	1.0000
	0.0000	0.0000
GE	0.16***	0.32***	0.53***	1.0000
	0.0422	0.0000	0.0000
HCI	0.73***	0.67***	0.59***	0.20***	1.0000
	0.0000	0.0000	0.0000	0.0007

Table 4. The relationship between CoC on QoG

VARIABLES	DOLS	FMOLS
	Control of Corruption	Control of Corruption
Quality of Governance	0.0289**	0.0243***
	(0.014)	(0.007)
GDP per Capita	0.659***	0.613***
	(0.160)	(0.092)
Government Expenditure	−0.0724***	−0.0848***
	(0.024)	(0.013)
Human Capital	−0.421	−0.167
	(0.411)	(0.221)
Constant	−5.678***	−5.356***
	(0.569)	(0.342)
Observations	149	151
R-squared	0.900	0.221

Note: Values in parenthesis are standard errors

***p <0.01, ** p <0.05, * p <0.1

Table 5. The relationship between QoG and CoC

VARIABLES	DOLS	FMOLS
	Quality of Governance	Quality of Governance
Control of Corruption	0.131***	0.111**
	(0.047)	(0.051)
GDP per Capita	−0.0322	−0.0172
	(0.047)	(0.051)
Government Expenditure	0.00676	0.00849
	(0.006)	(0.006)
Human Capital	0.167**	0.143*
	(0.080)	(0.086)
Constant	3.977***	3.885***
	(0.285)	(0.311)
Observations	149	151
R-squared	0.745	0.221

Note: Values in parenthesis are standard errors

***p <0.01, ** p <0.05, * p <0.1

Table 6. The Relationship between CoC and QoG (12 Indicators)

VARIABLES	DOLS	FMOLS
	Control of Corruption	Control of Corruption
Government stability	0.0794**	0.0192**
	(0.035)	(0.009)
Socioeconomic conditions	−0.179***	−0.0888***
	(0.038)	(0.009)
Investment profile	0.163***	0.0896***
	(0.052)	(0.009)
Internal conflict	−0.0811	−0.00577
	(0.057)	(0.012)
External conflict	−0.248***	−0.166***
	(0.079)	(0.016)
Corruption	0.271***	0.208***
	(0.081)	(0.020)
Military in politics	0.125*	0.0734***
	(0.067)	(0.019)
Religious tensions	0.169***	0.118***
	(0.054)	(0.013)
Law and order	0.169	0.0336
	(0.113)	(0.025)
Ethnic tensions	0.0475	0.159***
	(0.064)	(0.017)
Democratic accountability	0.119***	0.0885***
	(0.043)	(0.010)
Bureaucracy quality	0.271**	0.0196
	(0.121)	(0.033)
lgdpc	0.184*	0.477***
	(0.101)	(0.026)
ge	−0.00236	−0.0349***
	(0.014)	(0.003)
hci	0.191	−0.150***
	(0.210)	(0.056)
Constant	−3.082**	−4.086***
	(1.212)	(0.262)
Observations	149	151
R-squared	0.978	0.748

Note: Values in parenthesis are standard errors

***p <0.01, ** p <0.05, * p <0.1

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