Corruption Mudhorot for Economic Growth in 7 ASEAN Countries

HERU WAHYUDI

Economic Development, Faculty of Economics and Business

University of Lampung

Jln. H. Komarudin, Rajabasa Raya, Rajabasa, Bandar Lampung

INDONESIA

WIDIA ANGGI PALUPI

Economic Development, Faculty of Economics and Business

University of Lampung

Rajabasa, Bandar Lampung

INDONESIA

Abstract: - Corruption is a detrimental act for many people, especially related to the economy. Various groups

widely discuss corruption and economic growth from academia, government, and the private sector. This is

even more complex when coupled with competitiveness between countries and democratic systems. So this

study aims to analyze the mudhorot of corruption and the influence of global competitiveness and democracy

on economic growth in ASEAN countries. This study used panel data analysis methods in 7 ASEAN countries

from 2014-2019. The seven countries are Indonesia, Malaysia, Thailand, the Philippines, Vietnam, Laos, and

Cambodia. It is related to economic growth, corruption, and competitiveness in ASEAN countries. The results

of this study show that corruption brings mudhorot but has yet to be significant to economic growth. Another

interesting finding is that democracy negatively affects global competitiveness and increases economic growth.

This research can be one of the government's policy recommendations by increasing economic growth through

strict enforcement against corruption and increasing global competitiveness. To realize economic growth that

prospers society requires the role of the government through increasing human and institutional resources to

support other competitiveness factors that focus on technological, environmental, and innovation aspects.

Key-Words: - Corruption, Democracy, Global Competitiveness, Economic Growth

Received: April 22, 2022. Revised: January 15, 2023. Accepted: February 11, 2023. Published: March 7, 2023.

1 Introduction

The Creator of the universe orders people to do

justice and good deeds, gives rights to relatives, and

forbids abominations and wrongdoing. Violation of

sharia will create mudhorot on a micro and macro

basis. A country with a sound justice system, honest

government officials, and clear and strong

legislation will experience a higher standard of

economic living compared to a country where the

justice system is weak, the government is corrupt,

and there are frequent revolutions or coups. The

government maintains domestic security and

defence, administers justice, and provides goods not

provided by the private sector are the functions of

the government, [1].

The commitment of ASEAN countries is to

accelerate economic growth, social progress, and

cultural development in the region, to promote

regional peace and stability through respect for

justice and the rule of law in relations between

countries in the area, and adherence to the

principles, [2].

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Table 1. ASEAN Economic Growth 2014 – 2019 (in Percent)

Country

Year

2014

2015

2016

2017

2018

2019

Indonesia

5.01

4.87

5.03

5.06

5.16

5.01

Malaysia

6.01

5.09

4.44

5.81

4.76

4.30

Thailand

0.98

3.13

3.43

4.17

4.18

2.26

Philippines

6.35

6.34

7.14

6.93

6.34

6.11

Vietnam

5.98

6.67

6.21

6.81

7.07

7.01

Laos

7.61

7.27

7.02

6.89

6.24

5.45

Cambodia

7.14

7.11

6.93

6.84

7.46

7.05

Source: Word Bank 2020 (data processed)

From Table 1, in 2014, Laos had the highest

economic growth of 7.61%, while the lowest

economic growth was 0.98% in Thailand.

Nonetheless, Thailand's economic growth tends to

increase every year, except at the end of the year,

which fell by 1.92% from the previous year.

Indonesia has an economic expansion that tends to

be stable, which is at 5%, except in 2015,

Indonesia's economic growth fell to 4%, but after

that, it stabilized again at 5%. Malaysia has

economic growth in the range of 4-6%, but

Malaysia's economic growth rate tends to decline

during the study period, except in 2017, which

increased by 1.37% from the previous year.

The Philippines' economic growth is dominated

at 6%. This economic growth is higher than the

economic growth of Indonesia, Malaysia,

Singapore, and Thailand. The Philippines even

obtained 7.14% in 2016. However, the Philippines'

economic growth has continuously decreased,

although not significantly, except in 2016, the

Philippines' economic growth increased by 0.8%

from the previous year. Vietnam, Laos, and

Cambodia's economic growth is an economic

growth that is more significant than the last

country's explanation. Cambodia is a country that

has the highest average economic growth score

among ASEAN countries, which is 7.09%. This is

supported by the range of Cambodia's economic

growth rate, which is higher than that of other

ASEAN countries, namely 6-7%. Laos and Vietnam

have the same range of economic growth values,

namely 5-7%. Laos has an average economic

growth of 6.75%, while Vietnam has 6.6%.

Cambodia and Vietnam have almost the same

economic growth cycle, experiencing fluctuating

numbers every year. Laos although it has relatively

high economic growth, Laos' economic growth

continues to decline every year.

The economic growth of each country has

fluctuated. Many factors affect economic

development, including investment, technology,

labor, education, and capital. In addition, various

research sources state that corruption hurts

economic growth. [3] said that partially the

corruption perception index (CPI) had a positive and

significant effect on economic growth in ASEAN

countries (research 2000-2017). This means that

corruption hurts economic growth. This is supported

by economists who view corruption as one of the

reasons for a country’s decline in economic

development. The higher the level of corruption, the

worse the economic growth in a country. Corruption

is measured through the Corruption Perception

Index (CPI ), which has a score of 0-100. There is

less corruption when a country’s GPA is close to

100. When the CPI gets closer to 0 in a country, the

higher corruption in that country increases.

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Fig. 1: Corruption Relations and Economic Growth in 7 ASEAN Countries (2014-2019) Based on Average per

Year

Source: World Bank (2020) & Transparency International (2021), data is processed

In Figure 1, Cambodia is the country that has

the highest average economic growth in ASEAN

countries in the study period, namely 7.09%. Still,

Cambodia has the lowest average GPA among

nations and the study period, amounting to 20.67. In

contrast, Malaysia has an average economic growth

softer than Cambodia (5.07%) and has the highest

GPA in ASEAN. This means that there needs to be

more balance between the value of corruption and

economic growth in this country. In terms of the

effect of sin on economic growth, there are many

different results from researchers. Some economists

view corruption as the main obstacle to

development.

The impact of corruption on economic growth is

that it can reduce the state budget, which will impact

the state's ability to reduce corruption and the

amount of government spending, especially social

security and public welfare payments. This study

concludes that sin negatively affects outshine,

according to research conducted by [4].

[4], using the method of analysis of literature

studies with the object of 15 previous studies,

concluded that the effect of corruption on economic

growth depends on financial freedom. If economic

freedom has a high level of economic freedom, then

the CPI has a positive impact on the growth of

economic freedom. If economic freedom has a low

level of financial freedom, then the CPI hurts

economic growth. In other words, corruption hurts

economic growth if economic freedom is high in a

country. If economic freedom has a low level of

financial freedom, then the influence of corruption

has a positive effect on economic growth. Economic

freedom is a framework in which principles

compatible with the ideals of prosperity are

implemented in financial institutions and processes.

It is suspected that the effect of the difference in

these results depends on how financial freedom is

implemented in each country, as the study results,

[4]. In addition, good economic growth is economic

growth that tends to be stable, not too high, and no,t

too low. Most economists agree that the ideal

economic growth rate is 2% and 3%. This can

explain the differences in the results of the CPI and

economic growth in the study period, especially in

the cases of Cambodia and Malaysia.

Based on the theory of endogenous growth,

which states that economic growth is influenced by

factors of influence and availability of laws and

regulations, political stability, government policies,

and bureaucracy on country's economic growth, [5],

is concluded that there is a relationship between

corruption and economic development in 7 countries

ASEAN during the study period.

Apart from corruption, according to research

conducted by [6], democracy also has a positive and

significant effect on economic growth in Indonesia.

This means that every time there is an increase in

democracy, economic growth will increase.

Democracy is a form of government in which all

citizens have the same right to make decisions that

can change the lives of the people and the state in a

country.

[7] also researched the effect of democracy on

economic growth using 81 published literature

studies using the Meta-Analytic method. The

conclusion is that three-quarters of the regressions

have been unable to find the "desired" positive and

significant sign. The results of this study also prove

that half of the regression models find substantial

estimates, and the rest are nonsignificant. This

means that there are many differences in the results

of research on the effect of democracy on economic

growth from previous studies.

Indonesia Malaysia Thailand Filipina Vietnam Laos Kamboja

KO 37 49,67 36,67 35,33 33,33 27,83 20,67

PE 5,06 5,07 2,86 6,54 6,63 6,75 7,09

KO (Indeks), PE (%)

KO PE

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Fig. 2: Democracy Relations and Economic Growth in 7 ASEAN Countries (2014-2019) Based on Annual

Average

Source: World Bank (2020) & Economist Intelligence Unit (2019), data is processed.

From the picture above (Figure 2), it can be

seen that Cambodia has an average value of

democracy index of 4.01 and has the highest

average value of economic growth of 7.09%.

Meanwhile, Laos, which has the lowest average

democracy index (2.28), has an average economic

growth higher than other countries (except

Cambodia), 6.75%. The conclusion is that the

system and form of government influence the

democracy of ASEAN countries and how the

implementation of government performance, and the

contribution of society in a country. There is a

correlation between the form and system of the

state, the role of government, democracy, and

economic growth.

[8] argued that democracy has weak and fragile

political institutions. Democratic governments are

vulnerable to demands for redistribution to lower-

income groups. Non-democratic regimes can

forcefully implement rigid economic policies

necessary for growth and emphasize markets that

inhibit growth in low incomes—Justice and welfare

to the government. However, democracy is also

important because it is an effort to maximize the

role of society as social control of the government.

This is the basis for research on democracy

variables. As corruption is related to endogenous

growth theory, democracy is also part of an

endogenous factor because it sees political stability,

government policies, and bureaucracy on the

economic growth of a country.

In addition to corruption and democracy, many

opinions from previous research have resulted in

global competitiveness influencing economic

growth, even significantly and positively. This

statement is reinforced by research by [9], and, [10].

The Organization for Economic Cooperation and

Development (OECD) Program on Technology and

the Economy 1992 defines a country’s

competitiveness based on better productivity, [10].

According to Nababan, competitiveness is related to

improving living standards, developing employment

opportunities, and the ability of a nation to fulfill its

international obligations. This link supports

economic growth in a country. Meanwhile, the

World Economic Forum (WEF) defines a country's

competitiveness as the ability of the national

economy to achieve a sustainable growth rate.

Indonesia Malaysia Thailand Filipina Vietnam Laos Kamboja

DE 6,7 6,67 5,16 6,77 3,26 2,28 4,01

PE 5,06 5,07 2,86 6,54 6,63 6,75 7,09

DE (Indeks), PE (%)

DE PE

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Fig. 3: Relationship between Global Competitiveness and Economic Growth in 7 ASEAN Countries (2014-

2019) Based on Annual Average

Source: World Bank (2020) & World Economic Forum (2019), data is processed

From the picture above (Figure 3), it can be

seen that Indonesia, Malaysia, the Philippines,

Vietnam, Laos, and Cambodia have an average

global competitiveness of above 50 and get an

average value of economic growth of more than 5%.

Only Thailand has a high average global

competitiveness but a low economic growth rate.

This can support the research hypothesis, which

means that global competitiveness significantly

affects economic growth.

According to the Neoclassical growth theory,

the factors that influence economic growth

according to this theory are capital, labor, and

technology, [11]. This theory believes that

increasing the number of workers can boost

economic growth but must be supported by modern

technology. Economic growth is the process by

which there is an increase in Gross Domestic

Product (GDP) over a long period. So the economy

is said to grow or develop when output growth

occurs, [12]. The amount of output is a function of

labor and capital. Global competitiveness is

included in this theory because the framework for

forming the value of the worldwide competitiveness

index consists of 4 aspects: a supportive/conducive

environment, human capital, market aspects, and

innovation ecosystems, [13]. These four aspects are

further broken down into 12 pillars: institutions,

infrastructure, ICT adoption, macroeconomic

stability, health, skills, markets for goods and

services, labor market, financial system, economic

size, business dynamics, and innovation capabilities.

Based on the background above, the

formulation of the problem of this research is

the mudhorod of corruption for economic

growth in 7 ASEAN countries with the research

question of how is the influence of sin,

democracy, and global competitiveness on

economic growth in 7 ASEAN countries in

2014-2019. Do all the independent variables

jointly affect the dependent variable?

This study aims to partially and

simultaneously analyze how corruption,

democracy, and global competitiveness are

committed to economic growth in 7 ASEAN

countries. This study also analyzes more deeply

related to the modorot of bribery in the ASEAN

economy. In addition, the purpose of this study is

expected to be one of the considerations in

decision-making about minimizing cases of

corruption, global competitiveness, and

democracy to prosper the people in ASEAN

countries.

2 Methodology and Variables

This quantitative study uses secondary data from the

World Bank, Transparency International, Economic

Intelligence Unit, and World Economic Forum. The

objects in this study are 7 ASEAN countries from

2014-2019, which is called research with panel data.

The dependent variable used in this study is

economic growth. Meanwhile, the independent

variables used are corruption, democracy, and

global competitiveness. To provide direction in this

study, the following table (Table 2) of operational

definitions of variables is presented.

Indonesia Malaysia Thailand Filipina Vietnam Laos Kamboja

DS 65,18 73,84 66,8 62,15 60,58 54,42 54,57

PE 5,06 5,07 2,86 6,54 6,63 6,75 7,09

DS (Indeks), PE (%)

DS PE

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Table 2. Variable Operational Definitions

Variable

Source

Definition

Economic growth

World Bank

The annual percentage growth rate of Gross Domestic

Product (GDP) at constant market prices based on local

currency.

Corruption

Transparency

International

Survey results are released annually. They use the

methodology of selecting source data, rescaling source data,

combining rescaled data, and statistical measures indicating

the degree of certainty drawn from 13 data sets.

Democracy

Economist

Intelligence

Unit

Average based on answers to 60 indicator questions. Where

the solutions are primarily from experts. Some of the results

of public opinion surveys from each country.

Global

Competitiveness

World

Economic

Forum

The framework for forming global competitiveness is the

enabling environment, human capital, market aspects, and

innovation ecosystems.

The purpose of this study is to find out how the

influence of independent variables on dependent

variables both simultaneously and partially, so this

study uses the Ordinary Least Square (OLS)

method. Applying the OLS method must meet

classical assumptions to obtain the best, linear,

unbiased estimator (BLUE) results. The classical

belief consists of a normality test, a

heteroskedasticity test, an autocorrelation test, and a

multicollinearity test.

The economic models used in this study are as

follows:

Y = f(X1 , X2 , X3 , X4 ) (1)

Then the model is transformed into a model of the

panel data regression equation:

𝑃𝐸𝑖𝑡 = 𝛽0 + 𝛽1KO𝑖𝑡 + 𝛽2DE𝑖𝑡 + 𝛽3DS𝑖𝑡 + μ𝑖𝑡 (2)

Information:

𝑃𝐸𝑖t : Economic Growth (percent)

KO𝑖𝑡 : Corruption (index)

DE𝑖 t : Democracy (index)

𝐷𝑆𝑖𝑡 : Global Competitiveness(index)

𝑖 : Shows the cross-section

𝑡 : Shows the dimensions of the time series

β0 : Constant (intercept)

β1, β2 , β3 , β4 : Regression coefficient

μ 𝑖 t : Error term

3 Result and Discussion

3.1 Research Results

3.1.1 Descriptive Statistical Analysis

Descriptive statistics is an analysis that provides a

general description of the characteristics of each

research variable as seen from the average (mean),

maximum and minimum values. Based on the

results of the descriptive statistical test, the results

are obtained in Table 3 as follows:

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Table 3. Research Variable Descriptive Statistics

Mean

5.735262

34.35714

4.979524

62.50429

Media

6.165000

35.00000

5.000500

62.21500

Maximum

7.612000

53.00000

7.16000

74.65000

Minimum

0.984000

20.00000

2.14000

49.27000

Source: Eviews 9, (2022)

Based on Table 3, during the observation period

(2014-2019), the average economic growth in the 7

ASEAN countries was 5.74%. The highest

economic growth was in Laos, which was 7.61% in

2014. Laos is one of the ASEAN countries whose

economy is unstable. Various government efforts

have been made to increase the country’s economy,

especially since the AEC commitment was agreed

upon in 2015, as conveyed by Bouasone

Bouphavanh (Prime Minister of Laos 2015) that

Laos’ goal is to eradicate poverty so that it can get

rid of the status of “underdeveloped country” in

2020 with a focus on economic development, [14].

In addition, Laos started a change for the better by

becoming a d’mocratic republic. Laos highly

depends on regional economic growth, tourism,

foreign investment, and aid in an increasingly

integrated ASEAN economy. Some of them are

cooperation called the development of the Laos,

Cambodia, and Vietnam triangle, cooperation

between Laos, Thailand, and Cambodia, as well as

trade and economic cooperation on border

development between Ayeyawaddy and Chao

Phraya. This underlies the high level of economic

growth in Laos. At the same time, the lowest

economic growth was in Thailand in 2014, which

was 0.98%. This was caused by the political crisis,

the decline in agricultural commodity prices, and the

decline in exports. Key Thai agrarian sectors such as

rice and rubber experienced a global price slump.

This reduced the harvest volume and income of Thai

people, [15].

The study period's average corruption

(corruption perception index) was 34.4. Corruption

in ASEAN countries, if it is averaged, is relatively

high. Malaysia has the highest corruption perception

index in ASEAN, namely 53 in 2019, meaning

Malaysian corruption is the lowest in ASEAN. The

control of the public policy system is good in this

country. The lowest corruption perception index

was in Cambodia in 2018 and 2019, namely 20,

meaning that the highest corruption in ASEAN was

in Cambodia.

The average democracy during the study period

was 4.98. If levelled out, democracy in ASEAN

countries is categorized as a Hybrid Regime. If

averaged by government and research period, no

ASEAN countries (according to the research) are

classed as full democracies. Indonesia, Malaysia,

and the Philippines are classified as imperfect

democracies. Thailand is a hybrid regime, and

Vietnam, Laos, and Cambodia are ranked as

Authoritarian Regimes. Malaysia had the highest

democracy in 2019, namely, 7.16. Meanwhile, the

lowest democracy was in Laos in 2019, namely

2.14.

The average global competitiveness during the

study period was 62.50. Malaysia had the highest

global competitiveness of 74.65 in 2016, while the

lowest global competitiveness was in Laos in 2018

at 49.27.

3.1.2 Panel Data Regression Model Selection

The panel data regression model has three main

approaches, namely the Common Effect Model

(CEM), Fixed Effect Model (FEM), and Random

Effect Model (REM) as shown in Table 4, and Table

5. To find out the right approach in panel data

regression is determined through several tests,

namely the Chow test, Hausman test, and the BG-

LM Test.

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Table 1. Panel Data Regression Model Selection

Test

Prob

Decision

Chow

0.0000

FEM

Lagrange Multiplier (LM)

0.0000

CEM

Hausman

0.00 00

FEM

Source: Eviews 9, (2022)

Based on the tests that have been carried out,

the best model chosen to analyze the effects of

corruption, democracy, and global competitiveness

on economic growth in 7 ASEAN countries during

2014-2019 is the Fixed Effect.

Table 5. FEM Regression Estimation Results

Variables

coefficient

std. Error

t-statistics

Prob.

4.523386

3.595483

1.258074

0.2175

-0.054887

0.049842

-1.101209

0.2790

-0.979074

0.267527

-3.659723

0.0009

Etc

0.127559

0.048250

2.643680

0.0126

Effects specification

Cross-section fixed (dummy variables)

R-squared

0.892815

Mean dependent var

5.735262

Adjusted r-squared

0.862670

Sd Dependent var

1.486823

Se Of regression

0.550989

Akaike info criterion

1.850052

Sum squared residue

9.714834

Schwarz criterion

2.263783

Likelihood logs

-28.85109

Hannan-Quinn criteria.

2.001701

F-statistics

29.61667

Durbin-Watson stat

1.902264

Prob(f-statistic)

0.000000

Source: Eviews 9, (2022)

3.1.3 Classical Assumption Testing

The classic assumption test consists of a normality

test, multicollinearity detection, heteroscedasticity

test, and autocorrelation test. The normality test is

needed to determine the normality of the error term

and the dependent variable and the independent

variable. The research aims to test whether the

residual regression results have a normal

distribution.

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Fig. 4: Normality Test

Source: Eviews 9, (2022)

The picture above (Figure 4) shows that the J-B

Probability value of 0.067570 is more significant

than more excellent (0.05), which means that the

residue is spread commonly. According to the study,

[16], if the probability value of J-B is greater than

the value of 0.05, then the data is distributed

normally. Next is to detect multicollinearity with the

Variance Inflation Factor and Tolerance (VIF)

method as the test results are as follows:

Table 6. Multicollinearity Test with VIF

Variables

Coefficient Variances

Uncentered

VIF Centered VIF

0.002611

87.33667

4.976499

0.025656

19.05981

2.058059

0.005164

545.3243

6.105528

Source: Eviews 9, (2022)

From Table 6. it can be seen that the Centered

VIF value is below 10. If the VIF value is more than

10, it is suspected that there is multicollinearity. As

a rule of thumb, if the VIF value exceeds 10, it is

said that there is multicollinearity, [17]. The results

show that the VIF value is below 10, so the data is

free from multicollinearity problems.

Next is the heteroscedasticity test shown in

Table 7. The Heteroscedasticity Test aims to test

whether, in the regression model, there is an

inequality of variance from the residuals of one

observation to another. In this research,

Heteroscedasticity was tested using the Glacier

method. To determine whether the disturbance

variable pattern contains heteroscedasticity, this

method suggests carrying out a regression value of

the residual absolute value with the independent

variable.

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Table 7. Heteroscedasticity Test Results

Variables

coefficient

std. Error

t-Statistics

Prob.

3,523,817

2,040,629

1,726,829

0.0938

0.004658

0.028288

0.164669

0.8702

-0.066379

0.151836

-0.437175

0.6649

-0.047774

0.027385

-1,744,552

0.0907

Source: Eviews 9, (2022)

From the regression results above, it can be

concluded that the data is free from

heteroscedasticity problems because the probability

value is more than α = 5%, so this data is free from

heteroscedasticity problems. While the

Autocorrelation Test is the last classical assumption

test. Autocorrelation means a correlation between

members of the observation with other observations

at different times. One method that can be used to

determine whether there is a correlation between

error terms is Durbin-Watson. The results show

Durbin-Watson (FEM), namely Durbin-Watson stat

1.902264 with dL and dU values in the Durbin-

Watson table, where n = 42 k = 3 so that dL = 1.383

and du = 1.666 are obtained. So it can be concluded

that there is no autocorrelation problem in this study

because the Durbin-Watson value lies between dU

and 4-dU.

3.1.4 Statistical Testing

3.1.4.1 t-test test

The t-test is used to test each variable partially as

shown in Table 8. If H0 is rejected, the tested

independent variable significantly influences the

dependent variable. If H0 is accepted, the

independent variable tested has no significant effect

on the dependent variable.

According to the t-test, the decision is

carried out if the Right-sided one-way test

(positive):

1. Prob value t-statistic < level of significance,

then the independent variable significantly

influences the dependent variable.

2. Prob value t-statistics > significance level, the

independent variables do not significantly

affect the dependent variable.

One-way left-side(negative) test:

1. Prob value t-statistic < level of significance,

then the independent variable significantly

influences the dependent variable.

2. Prob value t-statistics > significance level, the

independent variables do not significantly

affect the dependent variable.

So that the resulting regression test of each

independent variable on the dependent variable is as

follows:

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Table 8. T-statistic test

Variable

t-statistics

Prob.

Conclusion

-1.101209

0.2790

H0 accepted

-3.659723

0.0009

H0 is rejected

2.643680

0.0126

H0 is rejected

Source: Eviews 9, (2022)

1. Prob test results. T-statistic variable corruption

(KO) of 0.2790. This value is greater than the

significance value of 5% (0.05) and the

confidence level or df (degree of freedom) = 95.

This means that H0 is accepted and Ha is rejected.

So it was concluded that the corruption variable

did not significantly affect economic growth in

ASEAN in 2014-2019.

2. Prob test results. The t-statistical variable of

democracy (DE) is 0.0009. This value is smaller

than the significance of 5% (0.05) and the

confidence level or df (degree of freedom) = 95.

This means that H0 is rejected, and Ha is accepted.

So it can be concluded that the democracy

variable has a negative effect (because it has a

negative t-statistic value of -3.659723)

significantly on economic growth in ASEAN in

2014-2019.

3. Prob test results. T-statistic variable global

competitiveness of 0.0126. This value is smaller

than the significance of 5% (0.05) and the

confidence level or df (degree of freedom) = 95.

This means that H0 is rejected, and Ha is accepted.

So it can be concluded that the global

competitiveness variable has a positive effect

(because it has a positive t-statistic value of

2.643680) significantly on economic growth in

ASEAN in the years 2014-2019.

3.1.4.2 F test

The F test was conducted to determine whether

all the independent variables simultaneously or

together were statistically significant in influencing

the dependent variable.

Table 9. F test

R-squared

0.892815

Mean dependent var

5,735,262

Adjusted R-squared

0.86267

SD dependent var

1,486,823

SE of regression

0.550989

Akaike info criterion

1,850,052

Sum squared residue

9,714,834

Schwarz criterion

2,263,783

Likelihood logs

-2,885,109

Hannan-Quinn criteria.

2,001,701

F-statistics

2,961,667

Durbin-Watson stat

1,902,264

Prob(F-statistic)

0.000000

Source: Eviews 9

Based on Table 9, the simultaneous significance

test results obtained a probability value (F-Statistic)

of 0.00 <0.05. It can be concluded that rejecting H0

means that all independent variables consisting of

corruption, democracy, and global competitiveness

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in ASEAN countries were equally influential and

significant to economic growth in 2014-2019.

3.1.5 Coefficient of Determination (R2)

The coefficient of determination (R2) measures how

well the model can explain the dependent variable.

Based on the results of the FEM test, the coefficient

of determination (R2) is 0.892815, which means that

variations in economic growth can be explained by

variations in corruption, democracy, and global

competitiveness of 89.2815%, and the remaining

10.7185% is influenced by variables other.

3.2 Discussion

Based on the results of tests carried out previously,

the panel data regression approach method chosen is

the Fixed Effect Model (FEM). The following is the

regression coefficient using the Fixed Effect Model

(FEM) method:

PEit = 4.523386 – 0.054887KO1it – 0.979074DE2it* +

0.127559DS3it* (3)

*) significant at α = 5%

The estimation results show the value of each

coefficient and how the independent variable

influences the dependent variable. The constant (c)

of 4.523386 has a positive sign, meaning that if

corruption, democracy, and global competitiveness

are equal to zero, then the average economic growth

in the 7 ASEAN countries in 2014-2019 is 4.52%,

which cateris paribus.

3.2.1 Effects of Corruption on Economic Growth

in 7 ASEAN Countries

The regression coefficient of corruption has a

negative and insignificant effect on economic

growth, namely -0.054887 in 7 ASEAN countries in

the research period. If corruption increases by one

index, economic growth in 7 ASEAN countries will

decrease by 0.054887 percent but not significantly,

assuming it cateris paribus. This result rejects the

research hypothesis. Although not significant,

corruption hurts economic growth. These results are

consistent with, [18] which states that economic

growth can increase corruption. The analysis results

show that relatively rich countries have lower levels

of corruption when compared to relatively poorer

countries. Prosperous or advanced do not

necessarily have a high level of economic growth.

The relationship between corruption and

economic growth, according to, [8], states that

corruption will increase economic growth by

accelerating the bureaucracy so that problems in the

bureaucracy are more accessible to solve using

money than by following the existing flow. But this

has an impact on Moral Hazard. As a country

leader, the government certainly needs to have

leadership with integrity, honesty, and fairness.

Every government policy decision will undoubtedly

have a positive or negative impact. There will be

challenges, risks, and even advantages or

disadvantages, as well as corruption-related policies.

No country wants to increase corruption. However,

the fact is that corruption occurs a lot in developing

countries. The study’s results rejected the

hypothesis due to the country's fluctuating economic

growth value and the uncertain research period.

The study results are by the endogenous theory

because this research looks at laws and regulations,

political stability, government policies, and

bureaucracy toward the economic growth of a

country. Endogenous growth theory includes

exogenous variables beyond neoclassical variables,

and corruption is an exogenous variable from

development.

Corruption is a deviant act. The government

must act decisively in dealing with corruption cases.

In this study, corruption has little effect on

economic growth. Still, when many officials commit

acts of corruption, public trust will decrease, and

domestic financial stability will be disrupted.

Corruption has an impact on reducing the budget

and reducing government spending, especially in the

field of social security and public welfare payments,

disrupting national defence and political stability.

Corruption can reduce the role and function of

maximizing government, including the function of

allocation, distribution, stabilization, development,

and empowerment, as the theory of government that

Musgrave sparked. The government must maximize

its role to improve according to its function.

3.2.2 The Influence of Democracy on Economic

Growth in 7 ASEAN Countries

The democratic regression coefficient negatively

and significantly influences economic growth,

namely -0.979074 in 7 ASEAN countries in the

study period. This means that if democracy

increases by one index, economic growth in 7

ASEAN countries will decrease by 0.979074

percent, assuming ceteris paribus.

According to [7], the relationship between

democracy and economic growth has been debated

for the last 50 years. So many research results on a

national and international scale have different

results from the influence of democracy on

economic growth. There is a relationship between

the system of government, the financial system, and

democracy in a country. How the system of

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government adopted in a country will affect all

forms of policies and community activities in a

country, including economic activities and

democratic conditions. Countries with multiple

parties will incur more party costs and costs to

support other democratic movements. This can

cause a large amount of budget to be issued by the

government, in contrast to countries with a two-

party system, such as the United States. The

electoral mechanism is more practical because of

the many candidate packages. There are only two

submitted, so the winner is sure to reach more than

50% of the, [19]. Efficiency and cost-effectiveness

can be controlled.

[8] argues that democracy has weak and fragile

political institutions. Democratic governments are

vulnerable to demands for redistribution to lower-

income groups. Non-democratic regimes can

enforce rigid economic policies necessary for

growth and impose constraints on low-income

growth demands, [7]. However, democracy in a

country is still needed. When the people speak up,

there is hope and the desired policy changes and

improvements. Of course, every policy has

advantages and disadvantages. This is the basis for

the voice of the people in a country. In addition, the

community also functions as government social

control. However, the government, as the decision

maker, has full power to determine policy. In

addition, the government is a driver of

"development" obligated to support policy programs

supporting economic development, including

considering socio-economic influences

(considerations about wealth and income

distribution). The government also has an

empowerment function, meaning that the role of the

community, both in freedom of expression and

opinion, must be heard. As [20] stated that public

disappointment is related to the implementation of

democracy in the country they live in, where in

practice, democracy does not necessarily fulfill what

the people want, for example, good public services,

freedom of the press, and opinion.

Implementing a democratic government

prevents one or several people from accumulating

power. They are reducing uncertainty and

instability, guaranteeing citizens who disagree with

current policies by providing rare opportunities to

change who holds power and thus has the authority

to make decisions. The results of this study are by

endogenous theory because this study looks at laws

and regulations, political stability, government

policies, and bureaucracy on the economic growth

of a country.

3.2.3 The Influence of Global Competitiveness on

Economic Growth in 7 ASEAN Countries

The global competitiveness regression coefficient

positively and significantly influences economic

growth, namely 0.127559 in 7 ASEAN countries in

the study period. This means that if global

competitiveness increases by one index, economic

growth in 7 ASEAN countries will increase by

0.127559 percent, assuming ceteris paribus. This

result is by [10], which states that the GDP of

ASEAN-7 countries has a positive and significant

effect on the increase in GCI, except for Thailand.

Research from, [21] also says that economic growth

has a significant positive impact on economic

growth. Likewise, study, [9] states that economic

growth has a significant positive effect on economic

growth, especially in the pillars of technology,

capacity, cost, and demand (case studies of

developing countries).

To increase global competitiveness, ASEAN-7

countries need to improve the sub-indices and

pillars of competitiveness by adjusting the

categories of development stages. To complete the

ranking of the progress of each country compared to

other countries, it is necessary to analyze other

indices such as the doing business indicator (World

Bank), the Human Development Index (UNDP), and

the Climate Competitiveness Index (PBB).

The results of this study are by the endogenous

theory because non-economic factors are included in

the pillars of the global competitiveness index, such

as institutional pillars that influence economic

growth. The results of this study are also by the neo-

classical theory. Capital, labor, and technology are

factors that affect economic growth. According to

this theory, increasing the number of workers can

boost economic growth but must be supported by

modern technology. According to this theory,

economic growth in a country is primarily

determined by its ability to increase its production

capacity, which is supported by the mobility of

labor and capital between countries. The

government's role in increasing development and

empowerment is vital to be maximized to support a

better country's economy by considering the existing

human, technological and environmental resources.

4 Conclusion

Based on the results of data analysis and discussion,

it is concluded that Corruption has no effect on

economic growth in ASEAN countries, Democracy

has a negative and significant impact on economic

growth in ASEAN countries, and Global

competitiveness has a positive and significant effect

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on economic growth in ASEAN countries in 2014-

2019. The results of this study also produce

corruption, democracy, and global competitiveness,

which significantly affected economic growth in

ASEAN countries in 2014-2019.

Although corruption did not have a significant

effect on the period and country of the study, crime

should be reduced accompanied by controlling

economic growth that is not too high and not too

low (2-3% range) because, in this way, economic

development and the corruption perception index

will be good in a given period: countries, especially

ASEAN. In conclusion, the government's slowness

in preventing and dealing with acts of corruption in

ASEAN countries has shaken political stability,

domestic security, and development.

Democracy in ASEAN countries is tailored to

the needs of each country. They are considering that

ASEAN countries have different government

systems and economic systems. Of course, every

government policy has advantages and

disadvantages. In addition, the community also

functions as government social control. However,

the government, as the decision maker, has full

power to determine policy. So, democracy is not

flawed in a country, but the government needs to

limit the number of parties because the more parties

there are, the more budget is issued by the

government, which can affect the economic growth

rate. Democracy can also encourage better

institutions.

To improve global competitiveness, ASEAN

countries need to enhance the sub-indices and pillars

of competitiveness by adjusting the categories for

their countries' growth and development stages. The

government's role in increasing growth and

development, as well as community empowerment,

is vital to be maximized, especially by paying

attention to human and institutional capital, because

human and institutional resources are the main

factors to support other competitiveness factors,

especially on technological, environmental and

innovation aspects.

This research can be helpful as a

recommendation for increasing economic growth in

ASEAN countries. Nevertheless, this research is

inseparable from limitations. The limitation of this

study is that it has yet to analyze one by one how

variable independents affect economic growth. So

that further research is expected to use in-depth

analysis in each ASEAN country. In addition,

further research can also use a combination of

independent variables between economic and non-

economic factors, which affect economic growth

more.

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Contribution of Individual Authors to the

Creation of a Scientific Article (Ghostwriting

Policy)

Heru Wahyudi made a research framework,

collected literature reviews proposed policy

recommendations. Widia Anggi Palupi collects,

processes research data, and writes the research.

Sources of Funding for Research Presented in a

Scientific Article or Scientific Article Itself

The research in this manuscript is supported by

Lembaga Penelitian dan Pengabdian kepada

Masyarakat (LPPM) Universitas Lampung.

Creative Commons Attribution License 4.0

(Attribution 4.0 International, CC BY 4.0)

This article is published under the terms of the

Creative Commons Attribution License 4.0

https://creativecommons.org/licenses/by/4.0/deed.en

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Conflict of Interest

The authors have no conflicts of interest to declare

that are relevant to the content of this article.