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analySEEs Report: Impact of Corruption on Economic Growth Performance in Developing Countries

analySEEs Report: Impact of Corruption on Economic Growth Performance in Developing Countries



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Published by: Analysees Consulting Group on Oct 31, 2008
Copyright:Traditional Copyright: All rights reserved


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 www.analySEES.co.ukPage 1
Impact of Corruption on Economic GrowthPerformance in Developing Countries
Quamrul Mahmud
 www.analySEEs.co.uk Page 2
Economic development is a multidimensional process which requires many factors working efficiently inan interrelated system. From the inception of country concept, all countries in the world have beentrying to increase economic growth. But economic history tells that only few countries have beensuccessful to achieve desired economic growth while many othercountries are lagging behind their economic goals.During the post war period, when trade liberalisation and economicintegration were emerging issues, there was a major positivechange in economic growth performance in different parts of theworld. In this period many developing countries, especially in EastAsia, have shown tremendous success in developing their economicconditions from a lower-income country to a higher-incomecountry. But at the same time many developing countries, mostly inSub-Saharan Africa, Central and South Asia and Latin America, havenot yet been successful to break the vicious circle of poverty.
Post war period, East  Asian countries have shown tremendous success in developingtheir economic conditions from a lower-incomecountry to a higher-income country 
 www.analySEEs.co.uk Page 3Cross-country difference in economic growth performance in developing countries is caused by manyfactors such as institutional inefficiency, environment degradation, negative impact of globalisation andtrade liberalisation, misuse of foreignaid, technological backwardness,inefficient market structure andresource allocation, non-competitivefinancial sector, inefficient utilisationof natural resources and, above all,government failure and corruption.This essay explains how corruptioncan be attributed as an importantfactor for cross-country differences in economic growth performance in developing countries. It will beargued that corruption is a major reason for decrease in investment, misallocation of resources,inefficiency of public and social services, international terrorism and income inequality.

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