The Impact Of Corruption On Growth And Development

Corruption is a complex and global phenomenon that has been prevalent in both public and private sectors. It occurs in all countries, developed as well as developing, rich and poor, but its impact varies depending on the country's culture, institutions, and stage of economic development. This study investigates the effects of corruption on growth and development at the global level and a country-specific level.Contrary to the belief that corruption "greases the wheels" of the world's economies, the study finds that corruption "sands the wheels" of economies instead. It hinders economic growth and development , leads to weak governance, impedes governments' ability to implement policies conducive to growth and development, negatively impacts economic performance by lowering productivity of the factors of production, and encourages tax evasion, which lowers governments' revenues.The study also examines the causes and consequences of corruption, and the measures adopted to mitigate the negative effects of corruption at the global and domestic levels, especially the United Nations Convention against Corruption (UNCAC), and the Stolen Asset Recovery Initiative (StAR).

This report provides an analysis of the impact of a range of corrupt practices on economic growth and development in four key sectors: utilities and infrastructure, extractive industries, health and education.

Seminar paper from the year 2010 in the subject Business economics - Miscellaneous, grade: 1,0, Berlin School of Economics (Global Governance), language: English, abstract: During the last decades, corruption became an important topic. About twenty years ago the issue started to gain increasing attention. Different Organization engage in the fight against corruption. This is a remarkable change compared to the situation before the 1990s. Back then, most people did not see it as a pressing problem. Actually, it was more seen as an integral part of doing business. Most European countries allowed for tax deductibility of bribes. Even the World Bank, not constricted by such national concerns, was avoiding the topic. The changed perception of corruption has manifold reasons. Foremost, the geopolitical situation changed remarkably. During the cold war, governments, despite their corruptness, were supported to make sure they were not joining the communist bloc. After the end of this ideological competition, the imperative to tolerate and not to address issues like corruption and abuse of political power ceased to exist. Last, but not less important, the USA, not constraint by geopolitical considerations, had economic interest to put the topic on the agenda. While for US-companies bribing abroad was forbidden, most other developed countries used graft to initiate business abroad. Therefore, the US had a special interest to push for anti-corruption laws to level the playing field for its companies. From a western normative and moral point of view this fight against corruption on the international level seems to be a desirable development. However, if those were the only reasons for this crusade, it could be misperceived as another example of the imposition of rules from the Global North on the Global South. Then again, if corruption has negative impacts, other than moral concerns, it would legitimize this movement. Prevailing corruption might influence the development and e

The book analyses the influence of corruption on economic growth and environmental protection, examining corruption from different perspectives. It contributes to several streams of the literature and assembles evidence of the influence of corruption on two important variables in human welfare: income and environmental policies. The material evinces the detrimental effect that corruption has on economic growth and on the stringency of environmental policies. It also shows that standard techniques for fighting corruption are often based either on simplistic definitions or on strong assumptions that do not apply in many countries blighted by corruption. From a methodological standpoint, this work combines a number of approaches including a theoretical discussion of corruption and of its definition (often omitted in economic studies), together with econometrics, case studies and policy discussions.

This report provides an analysis of the impact of a range of corrupt practices on economic growth and development in four key sectors: utilities and infrastructure, extractive industries, health and education. As quantification of the impact of corruption on economic growth at a macro level remains challenging, this report presents evidence at the micro and sectoral level to capture the various consquences of this phenomenon. Prepared by the OECD as a contribution to the G20 efforts to fight corruption, this report aims at increasing the understanding of the channels by which corruption inhibits economic growth and assist countries in further integrating anticorruption in their efforts to foster inclusive, sustainable growth and development. Drawing lessons from the cross-cutting analysis, the report encourages countries to design comprehensive anti-corruption strategies for which progress could be measurable and which would be tailored to specific country circumstances and economies to achieve the best results for economic growth and value-for-money

This study is, to the authors knowledge, the fi rst empirical cross-country analysis of the relationship between corruption and human development (HD) in Africa. In most African countries the current state of HD is critically poor. In spite of two decades of democratization and substantial economic growth or stability corruption has become endemic and tends to adversely affect HD conditions and needs. Using a pooledcross- section-across time-design and a sample of 40 African countries over many years (2003 2007) and based on an OLS Analysis, this study attempts an empirical examination of the association between corruption and HD in Africa, while holding constant economic growth, government socioeconomic or welfare expenditures and political system and, controlling for some major internal and external economic variables. As found, corruption adversely affects human development in Africa. Overall, based on the main study model (Model 1) a unit increase in the corruption level (CPI) on a scale of 1 to 10 will cause a .48 percent decrease in the state of HD (HDI).The relationship between corruption and HD is however non-linear: using Model 3 which incorporate a square term of corruption, it was found that at and below 4.577 RCPI (i.e. 5.42 normal CPI) corruptions is likely to positively affect HD whereas at and above 4.577 RCPI corruption rather tends to adversely affect HD with an increasing return. Besides, it was also found, using Model 2 which incorporates an interaction term of corruption and political system, that democratization has deceived scientists theoretical projections and peoples political expectations of the 1990s. Democracy has not improved HD in Africa. Both non-and partly democratic (i.e., authoritarian) and democratic political systems adversely affect HD. The adverse impact of corruption on HD is even worse in the latter systems. After checking for the main effect (Model 2) it appears that, as corruption increases by one unit, HD decreases by 9.48 percent in African countries with authoritarian systems. In contrast , the same one unit increase in corruption will have an additional 5.23 percent decrease in the HD of African countries with a democratic system. This study brings new insights about public policies ineffectiveness and failures to satisfy increasing HD needs in Africa. It throws new lights on the relationship existing between economic growth, democracy and corruption and HD. It suggests some policy reforms which could improve the state of HD in Africa. Overall, it is an important contribution to the theoretical and empirical body of administrative theory and knowledge.

The problem of corruption is of central significance for the developmental prospects of poor countries. Corruption undermines development by siphoning off resources for infrastructures and public services and by weakening the legitimacy of the state. The volume will appeal to academics and policy-makers concerned with problems of governance and public management in developing countries, as well as specialists working on corruption and designing anti-corruption strategies.

The problem of corruption is of central significance for the developmental prospects of poor countries. Corruption undermines development by siphoning off resources for infrastructures and public services and by weakening the legitimacy of the state. The volume will appeal to academics and policy-makers concerned with problems of governance and public management in developing countries, as well as specialists working on corruption and designing anti-corruption strategies.