Effects Of Corruption

Power tends to corrupt, and absolute power corrupts absolutely.

Corruption is a global phenomenon and exists in varying degrees in different countries. Corruption is not easy to define however there are numerous definitions of corruption in the academic literature. Transparency International 's definition " the misuse of entrusted power for private gains" and world Bank 's definition " the exercise of official powers against public interest or the abuse of public office for private gains" are rather representative of such a concept. However, when it comes to defining ‘corruption’ one must start with the Corruption Perception Index (CPI).

Transparency International (TI) annually publishes the Corruption perception index (CPI). The CPI is used

The first second will look at the Fiscal costs caused by corruption, mainly being a decline in revenue and increased government expenditure. The second section of the essay will address the economic effects of corruption, those being inefficiency, a decline in both FDI and investor confidence.

An important channel through which corruption affects a countrys fiscal performance is by impacting both the volume and composition of government expenditures and revenues.

The major fiscal cost of corruption is the loss in revenue. A number of countries, specifically developing countries, face institutional problems in the process of revenue generation, thus resulting in many of those countries being unable to generate a sufficient amount of revenue from taxation. The corruption in tax administration is one of those main problems.

Corruption compromises the government’s ability to collect taxes, thus reducing the tax revenue collected. .( Tanzi & Davoodi 1997).

The main cost of Corruption with regards to a loss in revenue is the long-term damage done to a country by lowering the tax-GDP ratio as well as distorting tax structures and corroding the tax morality of

Efficiency is concerned with the optimal production and distribution of these scarce resources. For an economy or organisation to be competitive an importance needs to be placed on achieving economic efficiency. The introduction of corruption, however, creates economic inefficiency. It does so by raising the marginal tax rate of firms, decrease business activity, raise the marginal costs of public funds, make certain government projects economically unviable, and undo the government’s ability to correct externalities, leading to inefficient outcomes. (Olken & Pande, 2012)

Corruption in south Africa has lead to many significant economic losses. This can be seen in the falsification of qualifications of many government officials. Notably, in 2014, Pallo Jordan the former Arts and Culture Minister, was found guilty of lying about obtaining his PHD and in fact has no tertiary qualifications whatsoever. The ministers entire career has come into question and has indeed lead to inefficiencies in that he was not adequality qualified nor did he have the know-how to correctly fulfil his