Heidi Gohar

ID : 87937
Course : Communication and development
Abstract

Corruption often conjures up images of people getting

rich. But in fact, corruption’s connections to poverty
are far more numerous and pervasive. Corruption
delays, distorts and diverts economic growth. It comes
in a variety of forms, and while no two countries are
alike, there are common dilemmas for all to see.

Introduction

The links between corruption and poverty affect both

individuals and businesses, and they run in both directions:
poverty invites corruption, while corruption deepens poverty.
Corruption both causes and thrives upon weaknesses in key
economic, political and social institutions. It is a form of self-
serving influence akin to a heavily regressive tax, benefiting
the haves at the expense of the have-nots. Trust–essential to
financial markets and effective governments everywhere–is
difficult to build in poor and corrupt societies.
Poor people and economically strapped businesses have few economic alternatives, and where
serious corruption is the norm, they are even more vulnerable to exploitation. In that sense, there is
no such thing as “petty” corruption: police shakedowns in a public market, or roadblocks in the
countryside where farmers must pay up in order to transport produce to the city, may yield
seemingly trivial sums of money, but they help keep poor people poor.

Low-level officials themselves may have trouble earning an honest living. In poor societies, they are
often underpaid, when they are paid at all, and must provide a stream of payments to patrons at
higher levels. In such settings, bribery, extortion and theft become matters of survival.

For businesses small and large, and particularly for international investors, serious corruption has
formidable costs. It is tempting–and, at times has been fashionable–to think of bribery as grease for
the wheels of bureaucracy. And indeed a sweetener or backhander paid to the right person at the
right time might help one firm, on one day, get a permit or a license more quickly.

But if we draw back from that isolated transaction, the deeply damaging dynamics become evident.
A firm that pays up is telling those underpaid or unpaid officials that they can make money by
dragging their feet, “losing” paperwork or contriving new requirements, forms and delays. They are
erecting a very prominent sign that says, “We Pay.” Such signals flash quickly through an economy
and a bureaucracy, particularly where legitimate opportunities are scarce, making for even more
corruption.

In corrupt markets and public bidding processes, inefficient firms and dishonest bidders have major
advantages over honest competitors. Connections and cash, rather than innovation and excellence,
become the ways to win contracts. Developing human capital and technical capacity for the next
generation are far less attractive than graft in the here and now.

Long-suffering citizens will not get what they pay for, but they will surely pay for what they get:
Waste, shoddy performance and phony cost overruns can all be covered up by bribes. The human
costs of such corruption may emerge only later, when bridges crumple and large buildings collapse,
as they have in the earthquake zones of Turkey, Iran and China.

At a higher level, extensive corruption threatens the basic notion of a fair return to investment, risk
and work. It undermines basic property rights, the courts, police, banking and currencies. Where
contracts cannot readily be enforced, assets cannot be protected, regulatory processes become
tools of self-enrichment and the basic safety of persons and property is not assured. Corrupt, short-
term gains might be huge, yet protecting those gains for the long term or reinvesting them may be
all but impossible.
At best, such insecurities will encourage investors to maximize short-term gains and to keep assets
as mobile as possible. More likely, capital flight will be the order of the day. Many of the world’s
best-run firms, worried about such uncertainties and seeing safer opportunities in better-governed
societies, will simply stay away. Sadly, the resulting poverty and uneven development may only
sharpen the incentives for further corruption.

Conclusion

Every country has corruption, even affluent democracies. Corruption does not explain all that is bad–
or negate all that is good–in any society. There are some societies in which extensive corruption,
painful as it is, may be less damaging than the real (as opposed to the ideal) immediate alternatives.
Further complicating things is the reality that a good reform idea for country A can be irrelevant in
country B, impossible in country C and downright harmful in country D.

Thus, no one has all the answers regarding corruption, and affluent nations have much to learn from
their poorer neighbors. Ultimately, lasting reform is a matter of enabling citizens, local businesses
and their international partners to insist on basic rights, depend upon the rule of law and hold
accountable those who govern.

Another name for that state of affairs? Justice