Corruption, Political Instability and Economic Development in the Economic Community of West African States (ECOWAS): Is There a Causal Relationship?

Despile the abundant research on economic dovelopmont, corruption and political instability, little research has attempled to examine whether there is a causal relahonship among them. This paper examines the causal relationship among corruption, political instability and economic devel opment in the ECOWAS using the Granger causality test within a multivanate cointegration and error correction framework for the 1996-2012 period. The findings indicate that political instability Granger-causes economic development in the short term, while political instability and economic development Granger-cause conuption in the long term. In addition, we employed the forecast error variance decomposition and impulse response function analyses to investigate the dynamic interaction between the variables. The results demonstrate positive unidirectional Granger causality from polilical inslability to economic development in the short term and positive unidirectional Granger causality from political instabilily and economic development to corruption in the long term in KOWAS countries. Thus, ECOWAS governments should employ policies to promote politi- cal stability in the region.