Cause And Effects Of Corruption
| Corruption is nothing but the abuse of public office for private gain. |
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Over the last few years, corruption has become a hot top and the interest in it has renewed. The reason why corruption is a hot topic is because it has the ability to topple governments in developed and developing countries.
In countries that are undergoing transition to free market economies, corruption has become rampant. A lot of research is being done on the cause and effects of corruption.
Cause of corruption:
It has been seen in many countries that there are opportunities to making excessive profits. This is primarily due to restrictions and government intervention. For example, trade restrictions like tariffs, foreign exchange allocation and government controlled provision of credit. Sometime, opportunity to make profits also arises because there is no government intervention. This can be illustrated by natural resources like oil, whose supply is limited and the extraction cost is far lower than market price. Also, when civil servants are paid low wages, it can lead to corruption as these people collect bribes to feed their families.
Effects of corruption:
It is believed that corruption reduces the economic growth of country as the incentive to invest decreases. This is best illustrated by entrepreneurs who are required to pay bribes to start an enterprise. Sometimes, the entrepreneurs also pay corrupt officials from the profits. Another effect of corruption is reducing the growth of a country as the quality of public services and infrastructure decreases. In addition, corruption decreases the tax revenue and productivity of people falls as they are busier try to make money.
Corruption also tends to alter the way a government spends money since corrupt government officials tend to spend money on things that will give them more money. For instance, a corrupt government official will be more willing to spend money on large scale projects since he will get more kickbacks then spending money on increasing teachers’ salaries.
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