Corruption is unlawful and dishonest conduct by individuals mostly in powerful. From Brazil to India, and from Thailand to Sudan and Russia, corruption is being condemned as something that threatens economic development and prosperity (Siddique, Bakar and Ghosh 12). This paper discusses how corruption and selfishness affect the success a country. Appropriate strategies that can be used to eradicate corruption in politics, government, and independent organizations are described.
Corruption is understood as the fraudulent or dishonest behavior by people who are in positions of power, such as police officers or government officials. It mainly involves bribery. According to Transparency International, corruption when entrusted power is abused for private gain. Depending on the sector in which the corruption takes place as well as the sums of cash that are lost, corruption could be categorized as political, petty, or grand (Transparency International, 2018).
Corruption significantly impedes the economic development and progress of a nation. For foreign firms, dealing with official extortion and having to pay bribes is akin to being compelled to pay an additional tax. Some international investors might have been able to get their business owing to the bribes that they paid. Even so, for each dollar of business that such companies get, the developing nation is losing several dollars of potential foreign investment by international firms (Kaplan and Akçoraoğlu 366). An increase in the level of corruption within the nation from a low level corruption like that in Japan, Norway, New Zealand or Denmark, to a higher level corruption like that in Venezuela, North Korea, Libya or Afghanistan, has the same negative impact on inward foreign direct investment (FDI) as increasing the rate of corporate tax by 50%. It is worth mentioning that this negative effect is the same as a tax on companies operating in the country because it serves to discourage investment. However, corruption, unlike taxes imposed by the government, does not generate any tax revenues for the government. Quite the opposite, it serves to erode the domestic tax base, given that a large number of developing nations are keen on attracting FDIs by providing generous tax benefits to multinational companies (Kaplan and Akçoraoğlu 367). Decreasing corruption or eradicating it all together could be more effective in attaining this goal devoid of sacrificing the revenues of the government.
Corruption and selfishness also negatively affect a country’s success by hindering economic growth. Corruption and selfishness are both a strong constraint on a country’s economic development and growth. They reduce a country’s economic performance because of rent-seeking, misallocation of the factors of production, inefficient investments, and an increase of transaction costs and uncertainty (Alon et al. 336).
On the whole, corruption and selfishness negatively affect economic growth, hence have an adverse impact on the success of a nation. A higher level of corruption in the country is associated with lower economic growth, whereas a lower corruption level is linked to higher economic growth. Widespread corruption in a country results in public distrust in government and is detrimental to the nation’s economic growth, hence negatively affecting the success of a nation. According to Ionescu (76), there are quite a few ways through which corruption adversely impacts economic growth. Firstly, corruption prevents the government from carrying out some of its main functions, for instance, tax collection. As such, people in the country have little incentive to pay taxes. This then generates a small amount of revenues from which the government could draw to provide for essential public services and economic growth (Ionescu 77). Secondly, when corruption in government, politics and independent organizations brings about lower public revenues for the government, the state may start depending more upon a central system of financing that is already weakened by the lack of adequate or proper regulation and oversight (Ionescu 78).
Thirdly, when corruption and selfishness inflate costs in the process of public procurement, Ionescu (82) pointed out that the abuse of public office by government officials embezzle the money set aside for public spending on crucial projects such as infrastructure that promotes economic growth. Fourthly, uncertainty is a major impediment to business, and corruption and selfishness in the country are known to create uncertainty. Consequently, in nations with rampant corruption such as Sudan, Haiti, North Korea, Turkmenistan, Venezuela, South Sudan, Iraq, Eritrea, Libya and Angola, business people find it very hard to launch and grow their business. This hindrance greatly weakens the private sector of such nations, and in the long term, negatively affects the success of the country (Ionescu 82). Moreover, when corruption is rampant in the country, there would be lower spending on business operations and maintenance. It will also result in lower quality of public infrastructure. These will, in turn, hinder the success of a nation.
Strategies for Eradicating Corruption
Given the negative impact of corruption and selfishness on sustainable economic growth and macroeconomic stability, and thus on a country’s success, reducing corruption is of great importance and should be a major priority for governments, especially in developing countries. Eradicating corruption, particularly in developing economies is critical to promoting financial stability, economic growth, and success of a nation. If developing nations like Nigeria, Ghana, to name a few want to promote a healthy societal structure and experience economic growth, they should work aggressively toward discouraging corruption (Kaplan and Akçoraoğlu 368). They should particularly do the following: develop an independent legal framework, create institutions that can prosecute offending people, compel business organizations to espouse standards on financial transparency, and promote de-regulation (Kaplan and Akçoraoğlu 369).
Even so, eradicating corruption should not only be left to the government. The private sector and private citizens also play an integral role in ending this dishonest and unlawful practice. Nearly all corruption cases involve public officials conspiring or communicating with a private citizen. Consequently, private companies also must assist in preventing bribery, money laundering, and corruption from spreading (Siddique, Bakar and Ghosh 15). That responsibility starts with first creating an appropriate organization-wide anti-bribery policy and making sure that the company always uses this policy to carry out ongoing employee awareness training.
In summary, corruption is generally the fraudulent behavior by individuals who are in powerful positions. Corruption and selfishness are known to significantly impede the economic development and progress of a nation; hence it has a negative impact on a country’s success. Corruption increases the costs of doing business in a country in which corruption is rampant, and it effectively discourages investment. Corruption and selfishness are a strong constraint on a nation’s economic development and growth. They decrease a country’s economic performance on account of misallocation of the factors of production, inefficient investments, and an increase in transaction costs and uncertainty. Eradicating corruption requires concerted efforts by both the government and the private sector. The government should establish an independent legal framework, create institutions that can prosecute offending people, and require companies to implement standards on financial transparency. On the other hand, private companies should create an appropriate anti-bribery policy and make sure that they always use this policy to carry out ongoing employee awareness training.
Alon, Ilan, et al. “Corruption, Regime Type, and Economic Growth.” Public Finance & Management, vol. 16, no. 4, Dec. 2016, pp. 332-361. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=bth&AN=119741568&site=ehost-live.
Ionescu, Luminița. The Influence and Effects of Bureaucracy and Corruption on Economic Growth. Addleton Academic Publishers, 2012. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=nlebk&AN=465608&site=ehost-live.
Kaplan, Emin Ahmet and Alpaslan Akçoraoğlu. “Political Instability, Corruption, and Economic Growth: Evidence from a Panel of OECD Countries.” Business & Economics Research Journal, vol. 8, no. 3, July 2017, pp. 363-377. EBSCOhost, doi:10.20409/berj.2017.55.
Siddique, Md. Abu Bakar and R. N. Ghosh. Corruption, Good Governance and Economic Development: Contemporary Analysis and Case Studies. World Scientific, 2015. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=nlebk&AN=942153&site=ehost-live.
Transparency International. What is corruption? Web. 2018.