Economics Of Corruption Research Paper

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Economics of Corruption

Corruption in an economic system starts at a macro-level. Growth of corruption and increasing presence in communities often affects entire systems of governance and produces negative effects on the gross productivity in a country. In addition, the aspect of gross inefficiency from the incidence of corruption has a frictional effect on economic development. Therefore, corruption practices such as bribery have a huge significance on the economic prospects of the developing countries. Kenya is one such country where corruption practices are rampant. With political class being in control, corruption has been rampant ranging from bribery of government officials, stealing of

One of the macro-economic effects of corruption is ability to disrupt economic stability. For example, there are allegations of bribery being the main determinant of awarding government contracts. The effect of such practices is instability in government operations where there are changes in leadership. For example, due to the greed that accompanies corruption and the desire to have a share of the bribery, new administrations often highlight the failings of past administrations and therefore create instability in procurement. Therefore, the tendering process is prone susceptible to changes in leadership because of corruption. This feature destabilizes the performance of organizations and businesses even after they win tenders in the event of changes in leadership(Robinson

Government funds are channeled to areas where they are beneficiary to the political leadership or where they serve the interests of the corrupt. For example, when budgetary allocations are being made, there is a tendency for the Kenyan government to consider the interests of strategic communities in terms of voting as opposed to the strategic and economic advantage of initiating projects in other areas. The result of the distortion of government expenditure

Perhaps the biggest effect of corruption is its role to create and sustain social classes in the developing countries. The rich classes often derive their riches from poverty and uses their resources to sustain the continued state of affairs (Gander 4-8). For example, the rich control all the productivity and use bribery, extortion and government influence to sustain these advantages. In the Kenyan case, key political leaders and prominent members of the local business communities are often implicated in corruption