Effects of Corruption on Economic Growth

Topics: Tax, Political corruption, Bribery Pages: 2 (509 words) Published: March 25, 2014

Corruption has been around for a very long time and will be around in the future unless governments can figure out effective ways to combat it. This is not going to be easy. Corruption in any form is treated as an incurable disease cause of many social and economic evils in the society and it damages the moral and ethical fibers of the civilization .Indisputably, it is correct that corruption breeds many evils in the society & once corruption start take place ,slowly and gradually whole country passes through its net and it becomes after some time incurable diseases .from the economic point of view ,there seem to be no clear cut correlation between corruption and the economic growth of a country. There may be some social maladies like inequality of income among the people ,moral degradation of people due to the prevalence of corruption ,the parameter of economic growth which are taken on percentage or an average basis are entirely different

To begin with, in the presence of corruption, businessmen are often made aware that an up-front bribe is required before an enterprise can be started and that afterwards corrupt officials may lay claim to part of the proceeds from the investment. Businessmen therefore interpret corruption as a species of tax--though of a particularly pernicious nature, given the need for secrecy and the uncertainty that the bribe-taker will fulfill his part of the bargain--that diminishes their incentive to invest. Empirical evidence suggests that corruption lowers investment and retards economic growth to a significant extent.

Moreover, when it takes the form of tax evasion or claiming improper tax exemptions, corruption may bring about loss of tax revenue.

What is more, the allocation of public procurement contracts through a corrupt system may lead to lower quality of infrastructure and public services.

Then, Corruption may distort the composition of government expenditure. Corruption...
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