Corruption Causes Consequences and Agenda for Further Research
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Corruption: Causes, Consequences and Agenda for Further Research What is corruption? Ø The abuse of public office for private gain • Broad categorizations of corruption Ø High level and low level corruption Ø Organized or chaotic corruption •
Some Probable Causes: � Trade Restrictions and Government Intervention – tariffs and import quotas � Partial Industrial policies – subsidies and tax deductions � Price controls � Multiple exchange rate practices � Foreign exchange allocation schemes � Government-controlled provision of credit � Government Allocation of Oil extraction rights � Low- paid civil servants
Expected Consequences of corruption: � Reduces economic growth � Lowers incentives to invest for both, domestic and foreign entrepreneurs � Corruption becomes a secret tax laden with uncertainty � Lowers quality of public infrastructure and services � Decreases tax revenues � Talent is wasted in rent seeking rather than productive activity � Distorts composition of government expenditure
Interlinked Institutional Weaknesses Abetting Corruption � Political instability � Bureaucratic � Weak red tape legislative and judicial system
Questions to be answered for effective research � Why the governments need to get rid of corruption for its high costs? � Does poverty breed corruption? � Which forms of corruption are worse? � What is being done? � What more can be done? � How should policy effectiveness be assessed over the next decade?
