WESTMINSTER INTERNATIONAL UNIVERSITY IN TASHKENT

COURSEWORK SUBMISSION FORM

STUDENT USE STAFF USE

Module Name Econometrics First Marker
Module Code 5ECON012C Second Marker
Module Leader Behzod Alimov Agreed mark
Word count 1082 For Registrar’s office use only (hard copy
submission)
Student IDs
00008908

Deadline Date
November 24th, , 2022
Assignment Type Individual Coursework

Students’ Comments

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Contents
Introduction

Literature Review

Methodology

Analysis and interpretation of the results

Conclusion

Reference List

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Determinants of crime.

A crime is an obvious and indisputable indicator of social and economic well-being in the country. I is not a
temporary phenomenon, not limited territorially, but a permanent and ubiquitous phenomenon. As before, it
continues to grow faster, than the size of the population, instantly filling any niches that are not controlled or
poorly controlled by the law. According to UN surveys, crime in the world on average grows up to 5% per
year with a population growth of 1-1.2%. Its social danger and harm caused by it is increasing. Qualitative
changes in criminal behavior drifting towards greater sophistication. Crime becomes more and more
organized, armed, corrupted, globalized, intellectualized and especially intensively “self-serving”, i.e. self-
interest becomes the most important, the most dominant motive of modern criminal behavior. Individual
criminals and, especially, organized criminal entities are often much faster than state organizations and legal
commercial structures, they use various achievements of science and technology to achieve their criminal
goals more effectively. It is well known that sophisticated crimes, especially in the economic sphere, are
committed by professionals, and are investigated by amateurs. More than a century ago, there were
assumptions about reducing the level of crime in the process of social, economic, political and cultural
development of human society. But

optimistic forecasts about its reduction and dying off in the process of industrial development are justified
neither in developed or developing countries, nor in capitalist or socialist countries. In the country's
economy, crime operates in the form of a shadow economy. The shadow economy exists in all countries of
the world. The main differences between the shadow economies in different countries are their volume,
forms of implementation and the level of social and legal control over it. The volume is great. The share in
the structure of the real economy reaches (according to various estimates) from 30 to 50%, and even more in
some sectors of the economy. “When self-interest supersedes public service, society collapses under the
weight of corruption.” ― Ken Poirot Moreover. Corruption is one of the forms of the crime, that greatly
affect the economy. Most developed countries such as New Zealand, Finland, Singapore, Germany and etc.
have the least corruption rates and high income levels.
On the basis of this work lies the motivation to find out the connection between corruption and the country's
economy. In particular, assess economic factors, such as gdp per capita, income rate, and their relationship
with corruption in the country. This work is important because, using the example of one country, we can
make a conclusion that can be useful for economic decisionmakers. Based on the following data,
policymakers will be able to decide which aspect of the economy needs to be paid more attention to reduce
corruption in the country.
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Literature review (not paraphrased)

Josten (2003) offered the idea that people who are satisfied with above average human capital endowment
will most probably engage in legal activity. On the contrary, those have below the average welfare will most
likely participate in a crime. He further came to conclusion that worsening income distribution can cause an
envy among the people and will result in an increase in the share of the population that engages in criminal
activity. This leads to a reduction of the security of individual property rights. Another researches Lo and
Jiang (2007) made another time series study linking income inequality and crime in Chine. They mentioned
in their study that during the reform period in China, the crime rate increased as well as income inequality
rose. Becker (1968) explained that enhancements in legitimate labor market opportunities caused by
improvement in a nation’s economy makes crime somewhat less attractive. These findings strongly
confirmed the idea that economic factors connected to economic cycles. Employment prospect and salary in
legal activities have a significant impact on crime rate. Contrarily, Chisholm and Choe (2005) noted that
empirical research on crime economics and economic situations often contradicts one another and yields
inconsistent findings. In an attempt to examine the connection between crime in the United States and
unemployment, inflation, and poverty rates, Coomer (2003) discovered that these variables are all positively
connected with crime, as expected.

Take reference from (PDF) Crime and Its Socio-Macroeconomics Determinants: A Panel-Error-Correction
Cointegration Analysis (researchgate.net)

Methodology

Data were collected from web sources such as MacroTrends.com. In this study we employ a multiple
regression model to estimate the relationship between CPI (corruption percentile index) and economic
determinants. As an dependent variable Corruption index is taken, and independent ones are

gross domestic product (GDP) per capita, unemployment rate and inflation rate (INR).
Our model is thus presented below:
CPI= f (GDP, INR, UR).
We observe statistics for 27 years, from 1995 to 2021. The selected country of observation is Germany.
In STATA software 4 variables were created manually, naming cpi, gdp, unemployment and inflation.
Here is a table of collected data:

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Year CPI X(GDP) Unemloyment rate (%) Inflation rate %
1995 81 31658.3494 8.16 1.7
1996 83 31658.3495 8.82 1.45
1997 82 31658.3496 9.86 1.94
1998 79 31658.3497 9.79 0.91
1999 80 31658.3498 8.86 0.59
2000 76 31658.3499 7.92 1.44
2001 74 31658.3500 7.77 1.98
2002 73 31658.3501 8.48 1.42
2003 77 31658.3502 9.78 1.03
2004 82 31658.3503 10.73 1.67
2005 82 31658.3504 11.17 1.55
2006 80 31658.3505 10.25 1.58
2007 78 41640.0809 8.6 2.3
2008 79 45612.7106 7.52 2.63
2009 80 41650.3678 7.74 0.31
2010 79 41572.4559 6.97 1.1
2011 80 46705.8958 5.82 2.08
2012 79 43855.8545 5.38 2.01
2013 78 46298.9229 5.23 1.5
2014 79 48023.87 4.98 0.91
2015 81 41103.2564 4.62 0.51
2016 81 42136.1208 4.12 0.49
2017 81 44652.5892 3.75 1.51
2018 80 47973.6076 3.38 1.73
2019 80 46794.8993 3.14 1.45
2020 80 46252.6893 3.81 0.51
2021 80 50801.7867 3.535 3.14

Next steps are regressing the variables and make analysis of output.

Commands:

<regress cpi gdp unemployment inflation> ,

The fitted regression model is CPI = 72.59626 + .0001406GDP +.3047559Unemployment

+-.5663462Inflation + 2.3893.
We got R-squared = 0.0521. which means only 5% of variations of the dependent variable can be explained
by independent variables.
P-value of each variable is used to test the null hypothesis. The less is p-value of the predictor the more
meaningful addition to my model can be this predictor. Gdp, unemployment rate and inflation rate have p-
values equal to 0.318, 0.431 and 0.451 respectively. All of them are greater than 0.05. which means that in
our model they are statistically insignificant.
Regression coefficients show by how much will change response variable as a result of one unit change in
the predictor holding other variables constant. This statistical indicator is important because it represent the
role of the one variable separately from others. Another way to interpret the coefficients is to think of them
as slopes of the variables, which is graphically can be illustrated.

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Conclusion

The most important finding is that corruption rate in a country rarely related to the fluctuations of gdp per
capita, inflation and unemployment rate. Coefficients of predictors and p-values also prove this statement.
Maybe there are more important factors not related to the economic ones, such as social ones. This issue
should be considered by different sides and even globally. During analysis some corrections need to be
applied to come up with more accurate and proper results. Overall, we failed to find the relationship between
corruption index and economic determinants statistically.

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Reference list

Becker, G. S. 1968. Crime and punishment: An economic approach. Journal of Political Economy 76: 1169-
1217

Coomer, N. 2003. America’s underclass and crime: The influence of macroeconomic factors. Issues in
Political Economy 12.

Josten, S. D. 2003. Inequality, crime and economic growth. A classical argument for distributional equality.
International Tax and Public Finance 10: 435-452.

Lo, T. W. & Jiang, G. 2007. Inequality, crime and the oating

population in China. Asian Criminology 1: 103-118.

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