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College of Education
School of Continuing and Distance Education 2016/2017
POLI 362
Development Administration
Session 12-Corruption and Development II
Lecturer: Prof. Emmanuel Debrah, Dept. of Political Science.
Contact Information: [email protected]
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Session Overview
• This session discusses a detailed account of its bad
consequences even though some scholars say that it could help turn
an economy to the path of progress.
Slide 2
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Session Outline
The topics to be discussed in this session are as follows:
• Topic One: Negative consequences of corruption
• Topic Two: Positive Effects of Corruption
Slide 3
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NEGATIVE CONSEQUENCES OF CORRUPTION
TOPIC ONE
Slide 4
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Undermines Economic Development
• Macroeconomic stability may be undermined by loss of
government revenue and excessive spending.
– This can happen through corruption in tax and customs
departments,
– Through debt incurred when the scrutiny of finance ministries
and central banks is bypassed,
– Through contracts that are awarded to high-cost bidders or
without competitive tendering, and
– Through the general erosion of expenditure control. Excessive
debt may be incurred through
Slide 5
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Undermine Direct Foreign Investment
• May truncate Foreign direct investment.
• Corruption can have a negative effect on foreign
investment.
• Or foreign investors may shun the country altogether. For most
foreign firms, corruption is a cost of doing business to be
recouped from revenues.
• If the costs become too high or unpredictable, foreign firms
will disengage.
Slide 6
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Effect of Corruption on Economy
• High levels of corruption add to the risk of a country being
marginalized in the international economy
• It encourages firms to evade good regulations as well as
bad.
• May force government to increase taxes
• High cost of living
Slide 7
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Social Effects of Corruption
• In the long run, opportunities for bribery are likely to lead
public officials to change the underlying rules of the game
• Or change their own behavior in the absence of bribes, and the
results are likely to be costly in terms fairness.
Slide 8
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Social Effects of Corruption (cont’d)
• The poor suffer. While poverty assessments have focused more
on measuring poverty than explaining
• Poor may be denied access to social services if bribes become
the means of access.
• Widen the inequality gap.
• Destroys social values.
Slide 9
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Political Effect of Corruption
• Undermines legitimacy of elected leaders
• Undermines human rights and freedoms
• Increase abuse of political power
• Can lead to break down of law and order
• May lead to abrupt end of a democratic government.
Slide 10
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Positive Consequences of Corruption
• Bribes can theoretically increase economic efficiency if they
allow firms to avoid overly restrictive regulations or confiscatory
tax rates.
• May serve as investible capital.
• Expansion in economy due to investment from bribes may create
employment opportunities.
• Promote social bonds and friendships
• Could Kill bureaucratic inertia/bottlenecks in centralized
administrative systems
Slide 11
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Sample Questions
1. To what extent would you say that corruption is evil.
2. Is corruption a economic, political and social evil?
Slide 12
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References
• World Bank, World Development Report 1997: The State in a
Changing World, New York: Oxford University Press.
• Klitgaard Robert. (1996). “Cleaning Up and Invigorating the
Civil Service,” World Bank Operations Evaluation Department.
• Borner, S., Brunetti, A. and Weder, B. (1994). Political
Credibility and Economic Development, New York: St. Martin's
Press.
• Mauro, P. (1995). “Corruption and Growth,” Quarterly Journal
of Economics.
Slide 13
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THANK YOU
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