Analysis The Effect Of Corruption On Economic Growth In Indonesia

Abstract

Every country including Indonesia seeks to carry out development in various fields to achieve rapid economic growth. Not only influenced by factors such as inflation and foreign direct investment which will also be discussed, economic growth is also influenced by institutional factors (institutions) which can be measured using indicators of the level of corruption which is believed to have an impact on economic performance. The view on the relationship between corruption and economic growth is still debated, giving rise to two different views known as “Grease of the Wheels” and “Sand of the Wheels”. If corruption has a positive impact, then corruption encourages economic growth (Grease of the Wheels), but if corruption hinders and harms, then corruption has a negative impact (sand of the wheels). This study uses a type of quantitative research with the Autoregressive Distributed Lag (ARDL) method in the form of time series data with a research time span from 1996 to 2022. The results showed that in the short term, corruption variables have a positive and significant effect on economic growth in Indonesia. While in the long run, corruption variables have a negative and significant effect on economic growth in Indonesia. Inflation variables in the short term have a negative and significant effect on lag 0 and positive and significant in lags 1, 2 and 3 on economic growth in Indonesia. While in the long run, the inflation variable has a negative and significant effect on economic growth in Indonesia. Foreign direct investment variable in the short term has a negative and significant effect on economic growth in Indonesia. While in the long run, the variable foreign direct investment (Foreign Direct Invesment) has a positive and significant effect at the 10% significance level on economic growth in Indonesia.