Relationships between corruption, electoral polarization, economic growth and inequality in the Peruvian case

ABSTRACT

This study analyzes the relationships between the variables of corruption, political polarization, economic growth, and income inequality for the Peruvian economy over the period 1998-2020. The methodology used to verify the degree of association and/or causality of the study variables were Pearson's correlation, linear, and quadratic regressions. The results point to a significant negative correlation between corruption and economic growth, and between electoral polarization and GDP, but that political polarization is positively associated with economic inequality measured by the Gini index (alpha = 1%). It was also found that economic growth decreases inequality. Therefore, it is concluded that corruption decreases economic growth, but that there is a "U"-shaped relationship between corruption and the Gini index. Consequently, at lower levels of corruption, an increase in the corruption perceptions index (CPI) decreases the Gini coefficient, but at higher levels of corruption, a rise in the CPI increases income inequality. Finally, the global coronavirus crisis has aggravated inequality in developed and developing countries, so it is recommended that policymakers implement political measures to reduce economic inequality and, at the same time, mitigate political polarization.