| Variables | Definition | Sources |
| Macroeconomic | ||
| LPIB | the logarithm of the annual growth rate of GDP | World Bank database, 2020 |
| Lpop | the logarithm of the rate of population | World Bank database, 2020 |
| LFBCF | the logarithm of gross fixed capital formation as a percentage of GDP | World Bank database, 2020 |
| LDP | the share of public expenditure allocated et each expenditure sector taken in logarithm: education, health, social protection, defense, public order and services, housing, culture, energy and fuel, other economic activities | World Bank database, 2020 |
| FDI | the nets flows of direct investment | World Bank database, 2020 |
| Institutional | ||
| Demo | Index of democracy: consider two components of freedom. The Political Rights Index measures the extent of free and fair elections, political pluralism, and political minority rights. The Civil Liberties Index measures civil liberties and individual freedoms such as freedom of speech, freedom to practice one’s religion, and freedom to assemble peacefully. Both indices range from one to seven, where lower numbers indicate higher levels of freedom. To determine the Demo variable, we take the average of these two indices. Countries are coded from 1 to 7 in terms of political rights and civil liberties. While “1” represents the most democratic country (advanced democracies), “7” means the least democratic country (unfree, lack of democratic principles). In addition, countries with an average of political rights and civil liberties between 1.0 and 2.5 are classified as “free countries”; countries with an average between 3.0 and 5.0 are defined as “partly democratic” and countries with an average between 5.5 and 7.0 are “not free countries” | Freedom House, 2020 |
| CC | the control of corruption in country (i) at time (t) (CC): this indicator measures the use of the prerogatives of power for personal gain, in particular the enrichment of individuals in positions of power. Developed by | World Bank Governance Database ( |
| Demo*Corr. interaction | the variable that captures the interactive influence of democracy in the corruption-growth relationship. | |