Corrupt politicians and bureaucrats can create situation for their own benefit and establish regulations for firms to pay bribes for them. In a corrupt environment, some group can influence the quality of regulatory services by controlling the key state institutions that are to enforce regulations. In terms of policy implications, this indicates that targeted efforts to curb corruption can yield significant benefits to improve the regulation of the business (Breen and Gillander 2010). Mauro (2002) in his corruption analysis, used corruption indices and multiple regression to analyses 106 countries the result shows that high levels of corruption are linked with reduce levels of investment as a share of Gross Domestic Product (GDP) and with lower GDP growth per capita. (Lambsdorff) support with evidence that corruption have negative impact on capital accumulation by discouraging capital imports.
The first one is when the central government's management capacity is weak, the corruption will make economic inefficiencies even much worse. The second reason is corruption distorts the country's investment direction from high-value industries, including health and education, shifting to lower-value including defense and infrastructure, as the latter one provides a better chance for secret corruption. And the demand for privacy or secret will lead to the national leaders continuing to maintain its exclusivity, and t set the barrier to block outsiders from the reform and innovation (Shleifer & Vishny, R. W., 1993). Mauro pioneered a systematic empirical analysis of the relationship between corruption and economic growth. Using corruption and other institutional indicators from Business International (BI), as well as real per capita income and investment GDP ratios to measure.
It not only increases cost of domestic investment by introducing uncertainties, reputational risks and vulnerability to extortion but also lowers FDI. Corruption in the form of tax evasion reduces the tax revenue base of a country. For example, by undermining the quality and quantity of health and education services, corruption decreases a country’s human capital. It may lead public officials to allocate public resources less on public welfare than on the opportunity they provide for extorting bribes, such as large infrastructure or defence projects not only affecting economic development but also increases income inequality. (Mauro 1995; Tanzi 1997; Gupta 2000; Gyimah-Brempong 2001; Akcay 2006; Fisman-Svenson 2007; Attila 2008; Nawaz 2010; Zurawicki- Habib 2010; Ugar- Dasgupta 2011; Rothestein- Holmberg 2011) Tanzi and Davoodi have identified four channels through which corruption affects economic growth, including
1. Introduction Bribery in international business is widely regarded as a major political and social issue around the world, and the one with plenty of harmful effects. Multinational companies have frequently traded payoffs for favourable conditions by decision makers to obtain contracts, reduce import duties, or acquire favourable interpretation of laws affecting the firm (Christopher Baughn et al., 2009). The rapid growth of international trade and investment has been accompanied by internationalization of corrupt practices including bribery over the past 50 years (Lambsdorff, 2007). The World Bank (2013) used a conservative approach to give an estimate for annual world bribery of about $1 trillion.
Corruption may be defined simply as the misuse of entrusted power for private gain . The financial resource involves in these corrupt deals could have been channelled into useful project that will help to stimulating growth and development in African country. It is also important to take note of the fact that no single regime or government in Africa after independence has been excluded from corruption saga, being rumour or truth. Taking Ghana for instance, there were corruption rumours levelled against ex-President Kufuor regime of purchasing a mansion (Hotel
The cost of corruption can be divided into four (4) main categories: (1). Political. Corruption is a major obstacle to democracy and the rule of law. It is extremely challenging to develop accountable political leadership in a corrupt climate; (2). Economic.
But the simple meaning of it is that corruption implies perversion of morality, integrity, character or duty out of mercenary motives, i.e. bribery, without any regard to honour, right and justice. In other words, undue favour for any one for some monetary or other gains is corruption. Simultaneously, depriving the genuinely deserving from their right or privilege is also a corrupt practice. Shrinking from one’s duty or dereliction of duty are also forms of corruption.
Most of them are associated with receiving or giving payment or obtaining or giving benefit or service illegally. However, it can also involve influence peddling through, for example, hidden financial relationships and campaign contributions that make those in public office “divert resources to benefit well-connected at the expense of the public interest”.2 The United Nations includes embezzlement (exploitation of position to steal public money) or any forms of misappropriation of public money, fraud, extortion, illicit enrichment, abuse of functions, nepotism, and exploiting conflict of interest as corruption.3 While many agree that corruption is damaging to the progress of a nation, accurately measuring the level of corruption and its cost to the country is a notoriously difficult task. To measure the level of corruption is difficult due to its secretive nature. Using the number of corruption cases reported to anti-corruption agency, or the number of corruption cases investigated and prosecuted does not give us the actual level of corruption and does not inform us whether the corruption level in a country has increased or decreased. An increase in the number of corruption cases reported, for example, does not necessarily indicate an increase in the actual incidence of corruption because it
Scholars define corruption as the abuse of entrusted power for private gain at the expense of the public good (Karklins 2002). On the other hand, Stapenhurst (2000), defines corruption as the abuse of public power for personal gain or for the benefit of a group to which one owes allegiance. The biggest