How would you explain the correlation between the amount of corruption in a country and economic development?
This posting should be at least 250 words. Respond to at least 2 other postings on separate days in each forum by 11:59 PM (Eastern) on Saturday. Your primary posting can end with a “tag-line” or a related question of your own. Your secondary postings can either answer another student’s question, or comment on their answering my question. In addition, please ensure that you answer all of my questions.
1st student response (Divya Garimella) :
Corruption is defined as the abuse of public office for private gain withdraw, affect all the countries and mainly the developing countries and it is a behavior that deviates from the formal rules for conduct governing the actions of someone in a position of public authority because of private motives such as wealth, power and status to achieve certain goals in illegal ways. Corruption economies shall be able to perform appropriately because it prevents the natural laws of the economy from carrying out freely, resulting in nation’s political and economic operations causes its entire society to suffer. Corruption are misused and take many forms by bribery, cheating, extortion, fraud, favoritism, sponsorship, theft of state assets and trading. Corruption is an extremely complex social behavior seen in structural problems of politics, economics and cultural and also individuals (Lucic. D, 2016)
Corruption affects resources allocation in two ways, private investments and its various merits influencing the prices of goods, services, production, including industries and second resources is misallocation of public and private investments which are made by corrupt government agencies. Corruption has been honored with significant time and attention among economists and global financial institutions such as banks as it has dominant effect on economic development, high prices for low quality manipulates policies and market mechanisms, inefficiently allocated resources via tender processes which results in excessive expenditure in the execution of projects, leading overall inefficiency in the use of resources and vulnerable to fraud and corruption due to large size of financial flows involved. Uneven distribution of wealth, low stimulation of innovation emerging countries are usually the importers of technology, small businesses in corrupt countries tend to avoid having their business officially registered with tax authorities to avoid taxation. Low foreign investment and trade is one of the disincentives for foreign investments. Poor education and healthcare has high corruption impact on the quality and provides emerging economies. Corruption makes these societies worse off and lowers the living standards (Mirzayev. E, 2019)
Lucic. D, 2016, retrieved from https://www.tandfonline.com/doi/full/10.1080/1331677X.2016.1169701
Mirzayev. E, 2019, retrieved from https://www.investopedia.com/articles/investing/012215/how-corruption-affects-emerging-economies.asp
2nd student response (Siva Krishna Kommineni) :
Corruption is the main problem in both developed and developing countries. Corruption will make the rich people become richer and poor people become poorer. It was discussed in the history, social studies and law until the late 1980’s after that due to the scrutiny has been increased because of the impact it creates on the economic growth of the countries. With the increase in the tools and technologies, globalization and industrialization in the technological world, corruption raised rapidly, widespread across all the sectors and dimensions, creating adverse effects on the country’s economy. Corruption increases the non – confidence among the government and its officials in public and its behavior and which makes to take ease on public. This will result in the poor performance of the government, local bodies which will lead to the back step from the development activities. The more the corruption increases, it leads to the financial crisis, instability, accumulation of wealth at one place, financial insecurity, private investments gets affected and which will lead more distortions in the government policies. Bribery is a part of corruption which results in the reduction of the Country GDP by 2%. Corruption mainly increases with the lack of human awareness, co-ordination and where the development areas are weak (İNAM, B., GÜZEL, S., & MURAT, D. (2019)).
Most recent studies indicate that corruption is the main reason for the countries social and economic development growth obstacle. The reason behind it is that corruption weakens the functions of the government bodies, affects the monetary and fiscal policies and causes permanent damage to the social, economic growth factors. Mainly in the low income countries corruption creates more damage to the country’s GDP and Per capital income and growth rate. The key areas that affect the corruption are the public, private investments and human capital. Without the investments from the organizations and people from various sectors it is impossible for country revenue, income building process which puts it back in the growth perspective. Corruption also plays a prominent role in the country politics, dynamic changes, decisions, capital selections, allotting the government lands, offices. It mainly starts by abusing the public for the private use and purpose where bribery is also a part, accepting gifts for the things that needs to be done by government officials. Rivalry among politics, taking competitive advantage among the political officials, Gaining personal advantage with the public assets and income are more increasing which leads to the path for corruption (Obamuyi, T. M., & Olayiwola, S. O. (2019)).
· Beglytsia, V. P., & Tsyplitska, O. O. (2018). Corruption and Economic Development: The Role of the State. Scientific Bulletin of Polissia, 13(1,Part1), 135–141.
· İNAM, B., GÜZEL, S., & MURAT, D. (2019). The Correlation between Corruption and Socioeconomic Development: An Application for Oecd Countries. Hacettepe University Journal of Economics & Administrative Sciences / Hacettepe Üniversitesi Iktisadi ve Idari Bilimler Fakültesi Dergisi, 37(2), 325–339.
· Obamuyi, T. M., & Olayiwola, S. O. (2019). Corruption and economic growth in India and Nigeria. Journal of Economics & Management, 35(1), 80–105. https://doi.org/10.22367/jem.2019.35.05