The Impact of Corruption Prevention on Innovation

Kálmán, Botond Géza and Németh, Erzsébet and Malatyinszki, Szilárd (2021) The Impact of Corruption Prevention on Innovation. TÉR - GAZDASÁG - EMBER / JOURNAL OF REGION ECONOMY AND SOCIETY, 13 (1). pp. 141-153. ISSN 2064-1176

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Abstract

Sustainability is a common topic in today's economic literature. The realization of this is unthinkable without effective and successful innovation. Sustainability can be compromised by many factors, such as the emphasis on the short term. Another phenomenon, which also has a negative effect on sustainability, is less often mentioned. This is the problem of corruption. Corruption is as old as history and still exists today despite all countermeasures. Therefore, it is important to assess how the effectiveness of prevention can be increased and what results the reduction of corruption can lead to. This study examines the impact of corruption on innovation. The question is actual because innovation is essential for ensuring sustainability. The study is carried out by the authors using data from public databases, using statistical methods. The relationship between the two phenomena was established with a correlation test, and the direction of the relationship between them was established with a causality test. The results confirm the positive effect of corruption control on innovation and infrastructure development. As a result of stronger prevention of corruption, on the one hand, resources intended for innovation can be prevented from being used for other purposes. This may be a consequence of transparency on the one hand, and more effective control on the other. The present research focused only on developed national economies, but based on the results, it is worth repeating in the future also in developing economies. Background and introduction: Industry 4.0 and sustainability are two common topics in today's economic literature. Both phenomena are closely related to innovation. However, there is also a historical phenomenon that can be an obstacle to sustainability and innovation. This phenomenon is corruption. Examining the connections between innovation management and corruption helps to understand how corruption affects innovation and how innovation technologies can contribute to reducing corruption. This study examines the first direction, i.e. the impact of corruption on innovation. Effective anti-corruption measures can be closely related to various indicators of innovation and research and development, such as research and innovation (R&I) policy, R&I spending, number of researchers, PCT patent applications, and licensing of intellectual property rights. Prevention of corruption can contribute to the more effective implementation of R&I policies. Clean and transparent governance ensures that innovation policies support research and development in a targeted and efficient manner. Objective: The purpose of this study is to examine the question of how innovation is influenced by the effectiveness of corruption prevention. Methodology: The authors examine the 2014-2022 time series of Bertelsmann Stiftung Sustainable Governance Indicators data. This index is a public database containing data from 41 EU and OECD countries. It contains both innovation and corruption prevention data. Its usability is also facilitated by the uniform methodology. The time series were processed by the author using statistical methods (correlation, regression, ANOVA, cluster formation). Corruption was measured with corruption prevention, innovation with R&I components (costs, number of researchers, PCT patents, intellectual property licenses). Results: More effective corruption prevention is associated with a higher level of innovation. Countries can be arranged in clusters based on the impact of corruption prevention on which component of innovation. Conclusions: Corruption is a phenomenon that still exists today. This study showed how the effectiveness of corruption prevention affects the individual components of innovation. It has been shown that more effective prevention of corruption helps innovation. Strengthening and international coordination of anti-corruption action can increase the amount of money that can be spent on innovation, thus helping sustainability efforts. Limitations and future research directions: The limitation of the research is that the Bertelsmann SGI database only includes developed EU and OECD countries, while at the same time corruption occurs to a greater extent in less developed countries. Acknowledgement (optional):

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