The Impact of Corruption and Rent-Seeking Behavior upon Economic Wealth in the European Union from a Public Choice Approach

Round 1

Reviewer 1 Report

My only suggestion for the paper is that the author(s) might want to use Quantile regression to anyalyse the data. This QR is better than the rest of estimated model.

 

 

Author Response

Response to Reviewer 1 Comments

 

Comments on the reviewers’ report for the paper

The impact of corruption and rent seeking behavior upon economic wealth in European Union from a public choice approach

 

            Our comments refer to the suggestions and recommendations the referees made in order to improve the quality of the research paper, and not to the positive remarks they made. We have to mention that most requirements were fulfilled in this new version of the paper.

 

Dear Reviewer,

First of all, we would like to express our gratitude for the work you dedicated for investigating our research, identifying the points for improvement and suggesting ways for achieving that. We are fully aware that your suggestions and recommendations are very important for improving our research and the way it is presented in this article.

Thank you and we hope we have answered all your suggestions and recommendations and improved our research.

My only suggestion for the paper is that the author(s) might want to use Quantile regression to analyse the data. This QR is better than the rest of estimated model.

Comment:

Thank you very much for the time taken to evaluate our paper, for your suggestions and support.

We have revised and improved our paper across all sections. We will use the Quantile Regression method in a future research in this topic. We appreciate your recommendation.

Best regards,

The authors

Reviewer 2 Report

I have carefully considered and read the manuscript entitled “The impact of corruption and rent seeking behavior upon economic wealth in European Union from a public choice approach” and have the following observations:

Current paper evaluates the impact of corruption and rent seeking behaviors upon economic wealth using a public option approach. The analysis is made for European Union states, with panel type data for the 2000-2019 period. To measure this impact this study uses a regression which includes variables reflecting the governance quality, such as Voice and accountability, Government Effectiveness, Rule of Law and Control of Corruption, considered relevant from a public choice approach of corruption and rent seeking. The main results of this study show a negative relationship between the level of corruption and economic wealth for all analyzed countries, and especially for the ones that make the new member states group. For all EU member states the variables capturing governance quality seem to have a positive impact on economic wealth. The higher levels of governance performances, synonymous with low levels of rent seeking, personal interest and political pressures on the state administration, contribute to eco-nomic wealth, as emphasized by public choice theory. Variables such as population change, trade openness, tertiary education attainment, government effectiveness and rule of law, also have a positive contribution on economic wealth in all scenarios.

Major comments and Suggestions for Authors:

This paper is missing the content clarity of the aims and objectives, so please do it to clarify for more understanding to meet the standard of readership of Sustainability. There is needful some more discussion, clarifications, improvements in modeling techniques (increase the articles reading), acute conclusion, policy recommendations, and research limitations for reconsidering that manuscript for publication in the Sustainability.

In addition to the above, I have a few points for the authors to consider before the publication of this work:

• The abstract should check thoroughly and compose it with a summative style without spelling mistakes and more focused on main impacting results and policy implications.
• Please highlight your contribution and novelty of this manuscript with accuracy in the introduction part before the arrangement description. Furthermore, the objectives of your study should elaborate clearly there in the introduction part.
• The literature and theoretical background should construct properly and add more relevant studies e.g. (latest) to grab and display more contemporary literature critically.
• Add the latest literature in this section

• Recheck the references and their style are according to the journal requirements, and in-text and end-text should be the same and vice versa.
• In the Methodology part, please more detailed the results and discussion in presence of constructed hypothesis part for the actual output of this study for stakeholders and targeted policymakers.
• In the result and discussion section, some associated literature must be added to compare and contrast the key findings with the existing studies. Furthermore, Study limitations should be included in final conclusion part.
• The conclusion should be based on your results and discussion. So, do consider it and improve it based on the logic of your results and do provide some recommendations and policy implications as well.
• The acronyms should be defined at first appearance in the manuscript and then must be consistently used throughout the manuscript. Furthermore, the manuscript must be checked for typo errors and spelling checks.

Author Response

Response to Reviewer 2 Comments

Comments on the reviewers’ report for the paper

The impact of corruption and rent seeking behavior upon economic wealth in European Union from a public choice approach

 

            Our comments refer to the suggestions and recommendations the referees made in order to improve the quality of the research paper, and not to the positive remarks they made. We have to mention that most requirements were fulfilled in this new version of the paper.

 

Dear Reviewer,

First of all, we would like to express our gratitude for the work you dedicated for investigating our research, identifying the points for improvement and suggesting ways for achieving that. We are fully aware that your suggestions and recommendations are very important for improving our research and the way it is presented in this article.

Thank you and we hope we have answered all your suggestions and recommendations and improved our research.

 

1. “The abstract should check thoroughly and compose it with a summative style without spelling mistakes and more focused on main impacting results and policy implications”.

 

Comment: We have revised the abstract (page 1).

“Current paper evaluates the impact of corruption and rent seeking behaviors upon economic wealth in European Union states using a public choice approach. The period of study is 2000 to 2019. To measure this impact the present study uses a regression that includes variables reflecting the governance quality, considered relevant from a public choice approach of corruption and rent seeking. The main results of this study show a negative relationship between the level of corruption and economic wealth for all analyzed countries, and especially for the ones that compose the new member states group. For all EU member states the variables capturing governance quality seem to have a positive impact on economic wealth. The higher levels of governance performances, synonymous with low levels of rent seeking, personal interest and political pressures on the state administration, contribute to economic wealth, as emphasized by public choice theory. There is need for reform and an increase in the efficiency of public institutions, especially in new member states.”

 

1. Please highlight your contribution and novelty of this manuscript with accuracy in the introduction part before the arrangement description. Furthermore, the objectives of your study should elaborate clearly there in the introduction part.

 

Comment:  We have added in the Introduction section the object of the study, the aim of the paper, the research tasks and the contribution and novelty of this paper (pages 2-3, rows 53-71 and rows 94-104).

 

“The originality of this paper resides in reexamining the contemporary issues of corruption and rent seeking as well as the effects they have upon economic wealth, at the level of all EU member countries, through a public choice approach. To achieve this, it was developed and improved an econometric model inspired by Thach et al. (2017). Starting from the acknowledgment of the roles corruption and rent seeking behavior have in all sectors of economic, social and political activities of any given state, present study looks to identify and evaluate how governance quality influences the public resources’ allocation process and implicitly the economic wealth. To highlight and compare these aspects the analysis was performed separately for the two samples of NMS and OMS, as well as for the entire set of EU countries. As such, this study completes the researches of reference literature, highlighting the quality of governance.”

 

1. The literature and theoretical background should construct properly and add more relevant studies e.g. (latest) to grab and display more contemporary literature critically.

Add the latest literature in this section.

 

Comment:  We have improved Literature review and we have added other prominent scholars in the public choice field. We have added more than 15 new references. We have reorganized the sections of the paper and their consistency, the literature review section being enriched with several other relevant papers in this field (Section 2, pages 3-5, rows 111-140, rows 185-188, and rows 235-248). He have used 65 references in this paper.

 

1. Recheck the references and their style are according to the journal requirements, and in-text and end-text should be the same and vice versa.

Comment: We have rechecked all references according to the journal requirements.

1. In the Methodology part, please more detailed the results and discussion in presence of constructed hypothesis part for the actual output of this study for stakeholders and targeted policymakers.

 

Comment: We have improved the Materials and methods section by adding the impact of the output of this study for policy-makers and stakeholders, page 12, rows 499-506.

1. In the result and discussion section, some associated literature must be added to compare and contrast the key findings with the existing studies. Furthermore, Study limitations should be included in final conclusion part.

Comment: We have improved the discussion section by comparing the key results of the analysis with previous studies, (page 17, rows 718-732). Study limitations have also been included (page 17, rows 739-749).

 

1. The conclusion should be based on your results and discussion. So, do consider it and improve it based on the logic of your results and do provide some recommendations and policy implications as well.

 

Comment: We have improved the Conclusion section (page 18, rows 777-780, 786).

 

1. The acronyms should be defined at first appearance in the manuscript and then must be consistently used throughout the manuscript. Furthermore, the manuscript must be checked for typo errors and spelling checks.

 

Comment: We have defined all acronyms at the first appearance in the manuscript. We also rechecked the manuscript for errors and spelling mistakes and we made some improvements.

 

Best regards,

The authors

Reviewer 3 Report

Research subject and problem

The problem is formulated correctly and is interesting and timely. However, the research is based on using/modifying a well-known model (Thach, Duong and Oanh) and uses measures (independent variables) developed by other institutions based on their own research (e.g. Transparency Int., Fraser Institute, World Bank).

Grade: 4/5 – above-average evaluation

Objectives and tasks

The objective of the research has been defined in correlation with the formulated research problem. It is clear and transparent. The research tasks have not been formulated. It is advisable to add a short text and list the tasks.

Grade: 4/5 – above-average evaluation

Research gaps

Research gaps are not formulated. The discussion in the paper indirectly points to these gaps. It is advisable to add a short text in the introduction (bulletin) emphasizing the filling of research/article gaps: theoretical, methodological, empirical.

Grade: 2/5 - negative evaluation

Questions and hypotheses

The article does not formulate any research questions and any related hypothesis (of course, it is not about the null hypothesis - the existence of a statistically significant relationship).  It is advisable to add text in the introduction (bullet points).

Grade: 2/5 – negative evaluation

Compliance of the content with the main objective (title)

The content of the article shows a link with the title and research objectives. It has been focused on the impact of corruption and rent seeking behaviors upon economic wealth using a public option approach (EU countries).

Grade: 5/5 - positive evaluation

Scientific value and originality

The research has scientific value (advantages over disadvantages). The authors have demonstrated their knowledge of the issues they are dealing with. The research is up-to-date, covering a long time series and a full set of sites (EU countries). It cannot be argued that they are wholly original. They repeat the application of a known model, modifying it and the whole regression evaluation process. This is what needs to be highlighted as the authors' own contribution (cf. removing existing gaps).

Grade: 4/5 – above-average evaluation

Methodology (selection of methods and tools)

The methodology for conducting the study is valid. Three approaches to regression testing were used (Pooled OLS, Random Effects REM, Fixed Effects Model FEM). The shortcomings of these approaches are properly discussed. This also applies to the test of statistical significance.

Grade: 5/5 – positive evaluation

Data and research test

The data used is quite extensive, covering 28 countries divided into three groups (total EU, old members, new members). The data cover a long sufficient time series (2000-2019) for the purpose of drawing conclusions regarding the determinants in the regression model.

Grade: 5/5 – positive evaluation

Interpretation of the results

he results are properly discussed. It is more concerned with the statistical side than the economic/social conclusions. The discussion of the results provides a critical evaluation of the regression model used and the emergence of the determinants of the dependent variable (GDP per capita).

Grade: 5/5 – positive evaluation

Discussion and conclusions

Conclusions are correctly formulated. They represent a generalization of the research results obtained. A discussion has been undertaken in relation to other results of the conducted research. It is advisable to add a discussion of the limitations of the research carried out. Further direction of the research is indicated.

Grade: 4/5 – above-average evaluation

The importance of solving the problem for theory and practice

The scientific value of the article is positive. It contributes to the scientific discussion of the titular research problem. They provide a reflection on the impact of determinants from the group of factors of corruption and rent seeking on wealth creation, and thus serve the formulation of social policies. Discussable is the long list of independent variables included in the model, some of which are distant from the issue of corruption. This choice (extension of the model) requires justification - is there an end to attaching variables to the model and where?

Grade: 4/5 – above-average evaluation

Structure and composition

The structure of the article is correct. In the introduction one should add: research gaps, hypotheses and the type of method used. From section 4 (results), the first paragraph should be moved to section 3 (method). In the conclusion, the limitations of the research should be stated. The bibliography is sufficient (quantity and structure) for the purposes of the research. Its selection is substantively correct.

Grade: 5/5 – positive evaluation

Formal requirements (language, edition)

Overall, the language is stylistically and formally correct, standard editorial and language proofreading required. To be verified will be the extent to which the publisher's editorial template is followed.

Grade: 5/5 – positive evaluation

Scope of problem solving - general overview

The article corresponds to the scope of the journal. The article shows no major deficiencies. Few comments serve to enhance its value. The scientific value is positive. The review's assessment of individual criteria is overwhelmingly positive, above average.

Author Response

Response to Reviewer 3 Comments

Comments on the reviewers’ report for the paper

The impact of corruption and rent seeking behavior upon economic wealth in European Union from a public choice approach

 

            Our comments refer to the suggestions and recommendations the referees made in order to improve the quality of the research paper, and not to the positive remarks they made. We have to mention that most requirements were fulfilled in this new version of the paper.

 

Dear Reviewer,

First of all, we would like to express our gratitude for the work you dedicated for investigating our research, identifying the points for improvement and suggesting ways for achieving that. We are fully aware that your suggestions and recommendations are very important for improving our research and the way it is presented in this article.

Thank you and we hope we have answered all your suggestions and recommendations and improved our research.

 

1. Research subject and problem

The problem is formulated correctly and is interesting and timely. However, the research is based on using/modifying a well-known model (Thach, Duong and Oanh) and uses measures (independent variables) developed by other institutions based on their own research (e.g. Transparency Int., Fraser Institute, World Bank).

Grade: 4/5 – above-average evaluation

 

Comment: We have improved the Introduction section with more and clear details about the research subject, objectives, research gap and tasks (pages 2-3, rows 53-71, 94-104).

“The object of this study is to offer an empirical assessment of the effects rent seeking behavior and corruption have upon economic wealth of European Union’s countries, through the variables which express governance quality.

The aim of the paper is to identify and develop an appropriate panel data regression to evaluate the impact corruption and rent-seeking behavior exert upon economic wealth, accounting for the quality of governance.

The research tasks are:

• To present the concepts of corruption and rent seeking;
• To underline the effects of these phenomena upon economic growth found in literature review;
• To analyse the relationship between economic wealth and corruption and rent seeking activities;
• To develop and improve an appropriate statistical model to express the impact corruption and rent seeking behavior exert upon economic wealth.

The research question is as it follows:

• Have the phenomenon of corruption and rent seeking a negative effect upon economic growth in European countries? In the same time, this study looks to answer why the corruption manifests differently in different countries and which are the possible causes that amplify this phenomenon.”

 

“The originality of this paper resides in reexamining the contemporary issues of corruption and rent seeking as well as the effects they have upon economic wealth, at the level of all EU member countries, through a public choice approach. To achieve this, it was developed and improved an econometric model inspired by Thach et al. (2017). Starting from the acknowledgment of the roles corruption and rent seeking behavior have in all sectors of economic, social and political activities of any given state, present study looks to identify and evaluate how governance quality influences the public resources’ allocation process and implicitly the economic wealth. To highlight and compare these aspects the analysis was performed separately for the two samples of NMS and OMS, as well as for the entire set of EU countries. As such, this study completes the researches of reference literature, highlighting the quality of governance.”

 

 

1. Objectives and tasks

The objective of the research has been defined in correlation with the formulated research problem. It is clear and transparent.

The research tasks have not been formulated. It is advisable to add a short text and list the tasks.  

Grade: 4/5 – above-average evaluation

 

Comment: We have added in the Introduction section the research tasks (pages 2-3, rows 59-66)

“The research tasks are:

• To present the concepts of corruption and rent seeking;
• To underline the effects of these phenomena upon economic growth found in literature review;
• To analyse the relationship between economic wealth and corruption and rent seeking activities;
• To develop and improve an appropriate statistical model to express the impact corruption and rent seeking behavior exert upon economic wealth.”

1. Research gaps

Research gaps are not formulated. The discussion in the paper indirectly points to these gaps. It is advisable to add a short text in the introduction (bulletin) emphasizing the filling of research/article gaps: theoretical, methodological, empirical.

Grade: 2/5 - negative evaluation

 

Comment: We have added one more specific paragraph in Introduction section in order to underline the research gap (pages 2-3, rows 97-104)

 

1. Questions and hypotheses

The article does not formulate any research questions and any related hypothesis (of course, it is not about the null hypothesis - the existence of a statistically significant relationship).  It is advisable to add text in the introduction (bullet points).

Grade: 2/5 – negative evaluation

 

Comment: We have added one more specific paragraph in Introduction section in order to underline the question of the research (page 2 rows 67-71).

 

“The research question is as it follows:

• Have the phenomenon of corruption and rent seeking a negative effect upon economic growth in European countries? In the same time, this study looks to answer why the corruption manifests differently in different countries and which are the possible causes that amplify this phenomenon.”

1. Compliance of the content with the main objective (title)

The content of the article shows a link with the title and research objectives. It has been focused on the impact of corruption and rent seeking behaviors upon economic wealth using a public option approach (EU countries).

Grade: 5/5 - positive evaluation

 

1. Scientific value and originality

The research has scientific value (advantages over disadvantages). The authors have demonstrated their knowledge of the issues they are dealing with. The research is up-to-date, covering a long time series and a full set of sites (EU countries). It cannot be argued that they are wholly original. They repeat the application of a known model, modifying it and the whole regression evaluation process. This is what needs to be highlighted as the authors' own contribution (cf. removing existing gaps).

Grade: 4/5 – above-average evaluation

 

Comment: We have added in the Introduction part the originality and contribution of this paper (pages 2-3, rows 94-104).

“The originality of this paper resides in reexamining the contemporary issues of corruption and rent seeking as well as the effects they have upon economic wealth, at the level of all EU member countries, through a public choice approach. To achieve this, it was developed and improved an econometric model inspired by Thach et al. (2017). Starting from the acknowledgment of the roles corruption and rent seeking behavior have in all sectors of economic, social and political activities of any given state, present study looks to identify and evaluate how governance quality influences the public resources’ allocation process and implicitly the economic wealth. To highlight and compare these aspects the analysis was performed separately for the two samples of NMS and OMS, as well as for the entire set of EU countries. As such, this study completes the researches of reference literature, highlighting the quality of governance.”

 

1. Methodology (selection of methods and tools)

The methodology for conducting the study is valid. Three approaches to regression testing were used (Pooled OLS, Random Effects REM, Fixed Effects Model FEM). The shortcomings of these approaches are properly discussed. This also applies to the test of statistical significance.

Grade: 5/5 – positive evaluation

 

1. Data and research test

The data used is quite extensive, covering 28 countries divided into three groups (total EU, old members, new members). The data cover a long sufficient time series (2000-2019) for the purpose of drawing conclusions regarding the determinants in the regression model.

Grade: 5/5 – positive evaluation

 

1. Interpretation of the result

The results are properly discussed. It is more concerned with the statistical side than the economic/social conclusions. The discussion of the results provides a critical evaluation of the regression model used and the emergence of the determinants of the dependent variable (GDP per capita).

Grade: 5/5 – positive evaluation

 

1. Discussion and conclusions

Conclusions are correctly formulated. They represent a generalization of the research results obtained. A discussion has been undertaken in relation to other results of the conducted research. It is advisable to add a discussion of the limitations of the research carried out. Further direction of the research is indicated.

Grade: 4/5 – above-average evaluation

 

Comment: We have substantially improved the Discussion and Conclusions sections (pages 17-18, rows 702-749, rows 777-780, 786).

 

1. The importance of solving the problem for theory and practice

The scientific value of the article is positive. It contributes to the scientific discussion of the titular research problem. They provide a reflection on the impact of determinants from the group of factors of corruption and rent seeking on wealth creation, and thus serve the formulation of social policies. Discussable is the long list of independent variables included in the model, some of which are distant from the issue of corruption. This choice (extension of the model) requires justification - is there an end to attaching variables to the model and where?

 Grade: 4/5 – above-average evaluation

Comment: Our main independent variables are the ones regarding corruption (CPI rescaled), economic freedom and democracy, as well as the ones regarding the quality of the governance (voice and accountability, government effectiveness, rule of law, control of corruption). The other considered variables are the level of investments, population change, trade openness, government expenditures and tertiary education attainment, which are used in this model as control variables, having important theoretical justification on economic growth, as also mentioned by Thatch et al (2017) and Grabova et al (2014) in their models. The extension of the model by adding quality of governance variables was made to emphasize the public choice dimension of the study, and it was statistical possible considering there are no statistical limitation due to the extensive data set of the samples. Summarizing, other variables can be added in the model (such as productivity, research and development) because of the R2 value that can still be increased (the explained variance in the dependent variables is not perfectly explained) but we considered that the limit of independent variables has been reached at least from a theoretical point of view, taking into account that we included variables that already reflect human capital, investments, democracy, government and institutional quality, as the main drivers for sustainable economic growth.

1. Structure and composition

The structure of the article is correct. In the introduction one should add: research gaps, hypotheses and the type of method used. From section 4 (results), the first paragraph should be moved to section 3 (method). In the conclusion, the limitations of the research should be stated. The bibliography is sufficient (quantity and structure) for the purposes of the research. Its selection is substantively correct.

Grade: 5/5 – positive evaluation

 

1. Formal requirements (language, edition)

Overall, the language is stylistically and formally correct, standard editorial and language proofreading required. To be verified will be the extent to which the publisher's editorial template is followed.

Grade: 5/5 – positive evaluation

Best regards,                                   

The authors

 

Reviewer 4 Report

This paper investigates the role of corruption and rent-seeking behaviour on economic wealth in the EU countries in a comparative perspective (i.e. NMS and OMS) using public choice theory.

Strengths – Data and empirical evidence.

Weaknesses – A more comprehensive literature review is needed. Link with theory and empirics should be strengthened.

I hope the authors find the below comments helpful to revise and improve their manuscript.  

 

1. Literature review.

1a. Although the paper claims that public choice theory is used as the underpinning theoretical approach in the paper, there is not one single mention/use of the theory in the literature review section. There are citations for Tullock and Krueger, but author(s) need to include other scholars prominent in the field, i.e. Buchanan, Olson, Stigler, Ostrom, etc.

1b. The literature review starts with corruption and its effects on the economy. It would be appropriate to start with Public Choice Theory which is in the core of this paper as the chosen theoretical approach and has been revived during the last decades. Corruption, rent-seeking behaviour and lack of or hindrance of competition are core elements of public choice theory in your paper. Whilst the latter is neglected, I believe it is important to include it. Economic wealth is the dependent in your model. Any relationship between governance and economic wealth is moderated through an economic indicator which is competition in this case. The effect of governance indicators is not direct on the economic wealth, but via distortion of competition in the market.

2. Methods

2a. There are a number of indicators used in the model. How is trade openness related to corruption or rent-seeking? This is surely an indicator important in the economic sense. But many indicators used in the model just appeared whereas the main focus in the theoretical parts have been corruption and rent-seeking. This has to be dealt with in the literature review section if other indicators are to be incorporated into the model. Another way of doing this is that the independent indicators can be categorised for what concept they measure which is called a latent variable and this is drawn from the conceptual framework in the study. I insist ‘competition’ should be added to the model as a moderator.

2b. The model. You don’t necessarily need to replicate the model of Thach et al. (2017), you can improve upon the model which perfectly allows for this. For instance, corruption perception, voice and accountability, rule of law and control of corruption can be merged to generate a latent variable for Corruption in your model. You can use PLS-PM to generate latent variables for corruption, rent-seeking and other concepts which can be measureable from the indicators you use. Can education and trade openness be regarded also as moderator indicators?

2c. You report both random effects and fixed effects results. This is very unusual and easy way to go for. Random effects and fixed effects are selected under different conditions. Tell the reader which one you prefer one over another and why and only report findings from one of them. The bottom line of this: is your data more suitable for random effects or fixed effects?

 

3. Discussion. Results show major differences between NMS and OMS. Discussion should address the why of these findings. There are plenty of other research especially for NMS which investigated these issues and authors should use prior research for a persuasive discussion of their findings here.  

 

4. Contribution of the paper. The author(s) claim that ‘ The paper contributes to reference literature, with its original and complex approach of corruption and rent seeking phenomena’s impact upon economic wealth, with quality of governance’s perspective bringing an extra value added to the analysis.’ The paper is solely replicating a model based on Thach et al. (2017). I find it difficult to understand this claim. You can only claim that you implement Thach et al's model in a different context, i.e. EU or if you develop and improve their model in the way suggested above there may be a valuable contribution to the extant literature.

 

     5.  The manuscript needs to be proofread and edited before submission.

Author Response

Response to Reviewer 4 Comments

Comments on the reviewers’ report for the paper

The impact of corruption and rent seeking behavior upon economic wealth in European Union from a public choice approach

 

            Our comments refer to the suggestions and recommendations the referees made in order to improve the quality of the research paper, and not to the positive remarks they made. We have to mention that most requirements were fulfilled in this new version of the paper.

 

Dear Reviewer,

First of all, we would like to express our gratitude for the work you dedicated for investigating our research, identifying the points for improvement and suggesting ways for achieving that. We are fully aware that your suggestions and recommendations are very important for improving our research and the way it is presented in this article.

Thank you and we hope we have answered all your suggestions and recommendations and improved our research.

1. Literature review.

1a. Although the paper claims that public choice theory is used as the underpinning theoretical approach in the paper, there is not one single mention/use of the theory in the literature review section. There are citations for Tullock and Krueger, but author(s) need to include other scholars prominent in the field, i.e. Buchanan, Olson, Stigler, Ostrom, etc.

Comment: We have improved Literature review and we have also added other prominent scholars in the public choice field (Section 2, pages 3-4, rows 111-140, rows 185-188, and rows 235-248). We have used 65 references in this paper.

1b. The literature review starts with corruption and its effects on the economy. It would be appropriate to start with Public Choice Theory which is in the core of this paper as the chosen theoretical approach and has been revived during the last decades. Corruption, rent-seeking behaviour and lack of or hindrance of competition are core elements of public choice theory in your paper. Whilst the latter is neglected, I believe it is important to include it. Economic wealth is the dependent in your model. Any relationship between governance and economic wealth is moderated through an economic indicator which is competition in this case. The effect of governance indicators is not direct on the economic wealth, but via distortion of competition in the market.

Comment: We have reorganized the sections of the paper and their consistency, the literature review section being enriched with several other relevant papers in this field (Section 2, pages 3-4, rows 111-140, 185-188, 235 -248).

 

1. Methods

2a. There are a number of indicators used in the model. How is trade openness related to corruption or rent-seeking? This is surely an indicator important in the economic sense. But many indicators used in the model just appeared whereas the main focus in the theoretical parts have been corruption and rent-seeking. This has to be dealt with in the literature review section if other indicators are to be incorporated into the model. Another way of doing this is that the independent indicators can be categorised for what concept they measure which is called a latent variable and this is drawn from the conceptual framework in the study. I insist ‘competition’ should be added to the model as a moderator.

Comment: Trade openness is used in this study as an independent control variable on economic growth, as well as other independent variables such as investment, population change and education, as mentioned at the page 9, rows 388-392. We thank you for suggesting us the use of latent variables in regression models, we will make sure to take into account your recommendation in our future research.  

2b. The model. You don’t necessarily need to replicate the model of Thach et al. (2017), you can improve upon the model which perfectly allows for this. For instance, corruption perception, voice and accountability, rule of law and control of corruption can be merged to generate a latent variable for Corruption in your model. You can use PLS-PM to generate latent variables for corruption, rent-seeking and other concepts which can be measureable from the indicators you use. Can education and trade openness be regarded also as moderator indicators?

Comment: In the considered model, the level of corruption is already captured by the rescaled corruption perception index variable. Our view was to analyse the impact of the specified independent variables that reflect the quality of governance on gdp on their own, as important elements in the public choice field. We thank you for your suggestion of using the PLS-PM, we will make sure to enhance our future research by taking into consideration the regression analysis using moderator indicators.

2c. You report both random effects and fixed effects results. This is very unusual and easy way to go for. Random effects and fixed effects are selected under different conditions. Tell the reader which one you prefer one over another and why and only report findings from one of them. The bottom line of this: is your data more suitable for random effects or fixed effects?

Comment: It is specified that the Fixed effects model is preferred over the Random effects model at page 13, rows 541-545. However, for a more specific indication of the used base model we enhanced our paper with the additional phrase at the rows 545-546. Furthermore, the main analysis is based on the improved FEM using the Least Squares Dummy Variables Model (LSDV), and also on the PCSE/FGLS models considering the statistical limitations of the FEM, which resulted from the specified tests.

3. Results show major differences between NMS and OMS. Discussion should address the why of these findings. There are plenty of other research especially for NMS which investigated these issues and authors should use prior research for a persuasive discussion of their findings here.  

 

Comment: We have improved the discussion section by further explaining the results, incorporating previous papers and studies, as well as indicating the limitations of this study (page 17, rows 702-749).

 

4. Contribution of the paper. The author(s) claim that ‘ The paper contributes to reference literature, with its original and complex approach of corruption and rent seeking phenomena’s impact upon economic wealth, with quality of governance’s perspective bringing an extra value added to the analysis.’ The paper is solely replicating a model based on Thach et al. (2017). I find it difficult to understand this claim. You can only claim that you implement Thach et al's model in a different context, i.e. EU or if you develop and improve their model in the way suggested above there may be a valuable contribution to the extant literature.

Comment: We have added in the Introduction section the object of the study, the aim of the paper, the research tasks and also the contribution and the novelty of the paper (pages 2-3, rows 53-71, pages 2-3, rows 94-104).

“The object of this study is to offer an empirical assessment of the effects rent seeking behavior and corruption have upon economic wealth of European Union’s countries, through the variables which express governance quality.

The aim of the paper is to identify and develop an appropriate panel data regression to evaluate the impact corruption and rent-seeking behavior exert upon economic wealth, accounting for the quality of governance.

The research tasks are:

• To present the concepts of corruption and rent seeking;
• To underline the effects of these phenomena upon economic growth found in literature review;
• To analyse the relationship between economic wealth and corruption and rent seeking activities;
• To develop and improve an appropriate statistical model to express the impact corruption and rent seeking behavior exert upon economic wealth.

The research question is as it follows:

• Have the phenomenon of corruption and rent seeking a negative effect upon economic growth in European countries? In the same time, this study looks to answer why the corruption manifests differently in different countries and which are the possible causes that amplify this phenomenon.”

 

“The originality of this paper resides in reexamining the contemporary issues of corruption and rent seeking as well as the effects they have upon economic wealth, at the level of all EU member countries, through a public choice approach. To achieve this, it was developed and improved an econometric model inspired by Thach et al. (2017). Starting from the acknowledgment of the roles corruption and rent seeking behavior have in all sectors of economic, social and political activities of any given state, present study looks to identify and evaluate how governance quality influences the public resources’ allocation process and implicitly the economic wealth. To highlight and compare these aspects the analysis was performed separately for the two samples of NMS and OMS, as well as for the entire set of EU countries. As such, this study completes the researches of reference literature, highlighting the quality of governance.”

 

5. The manuscript needs to be proofread and edited before submission.

Comment:

We have rechecked the manuscript for errors and spelling mistakes and we have made some improvements.

 

Best regards,

Authors

 

Round 2

Reviewer 1 Report

I think the author(s) have done a great job in revising the paper.

Author Response

Response to Reviewer 1 Comments

 

Comments on the reviewers’ report for the paper

The impact of corruption and rent seeking behavior upon economic wealth in European Union from a public choice approach

Dear Reviewer,

Thank you very much for the time taken to evaluate our paper, for your suggestions and support. We greatly appreciate your constructive and kind support.

 

Best regards,

The authors

Reviewer 2 Report

This paper is very clear and interesting. The authors have done properly all the necessary corrections. The manuscript has considerably improved and so far, it is endorsed for final publication in Sustainability.

Author Response

Response to Reviewer 2 Comments

Comments on the reviewers’ report for the paper

The impact of corruption and rent seeking behavior upon economic wealth in European Union from a public choice approach

 

Dear Reviewer,

Thank you very much for the time taken to evaluate our paper, for your suggestions and support. We greatly appreciate your constructive and kind support.

Best regards,

The authors

Reviewer 4 Report

I can see that the author(s) have responded to majority of my remarks from revision round 1. I understand that rerunning the empirical analysis is a rather difficult task, however I am glad that it can be considered for future research when dealing with many manifest indicators to create latent constructs for ease of interpretation. 

Page 17, line 704-5 sentence incomplete. Please check. 

 

Author Response

Response to Reviewer 4 Comments

Comments on the reviewers’ report for the paper

The impact of corruption and rent seeking behavior upon economic wealth in European Union from a public choice approach

 

Dear Reviewer,

 

Thank you very much for the time taken to evaluate our paper, for your suggestions and support. We greatly appreciate your constructive and kind support.

Page 17, line 704-5 sentence incomplete. Please check.

Comment:

We have rechecked line 704-705 and have corrected.

Best regards,

Authors