How Does Corruption Affect Economic Growth

955 Words4 Pages
1 Introduction Corruption has a deterrent effect on economic growth of a country; as such countries normally lose their businesses credibility and investors’ confidence as well. It also leads to unequal distribution of wealth resulting in majority of the populace being poor leaving wealth in the hands of few. Funds that could have been used for developmental purposes for benefit of the entire nation are used for private gain. According to Ian McCartney “Corruption affects every country; what many people see as a way to get things done is, in fact a crime. Every year, over US$1 trillion is paid in bribes with devastating consequences. It hits the poorest people in the poorest countries hardest”. According to Vienna, (2007) World Bank…show more content…
Corruption has been found to be a major obstacle to economic growth (growth of small and medium term enterprise) in developing countries. According to Murphy and Vishny, (1991), Corruption negatively affect the allocation of entrepreneurial talent, when, in highly corrupt environments, entrepreneurs may spend a lot of their time and efforts to obtaining valuable licenses and preferential market access than to improving productivity and this can hinder…show more content…
The new government of Afghanistan is actively involved in combating corruption and has place several measures to deal with it, but much still needs to be done as this endemic issue still persist, with this research, it would assist with which firms are most vulnerable to corruption. Thus, the purpose of this study is to investigate how and which firms are most affected by corruption as an obstacle using the ordered probit model. We use the World Bank enterprise survey data which covers small, medium and large enterprises in

More about How Does Corruption Affect Economic Growth

Open Document