How Corruption Affects a Nation’s Socio-Economic And Political Development
CORRUPTION is one of the oldest and most perplexing phenomena in human society, and it exists in every country in the contemporary world — it is also not exclusively a problem of developing countries.
The classical concept of corruption as a general disease of the body politics was stated by ancient political philosophers Plato and Aristotle. Plato in his theory of the “perverted” Constitutions-Democracy, oligarchy, and tyranny-worried that regimes instead of being guided by the law were serving the interest of the rulers.
Machiavelli argued corruption was process by which the virtue of the citizen was undermined and eventually destroyed. “Since most men are weak and lacking in the virtue of the good citizen except when inspired by a great leader, the process of corruption is ever threatening. And when virtue has been corrupted, a heroic leader must appear who in rebuilding the political order infuses this virtue into the entire citizenry.”
Arnold Heidenheimer (1993 p. 25) Montesquieu saw corruption as the dysfunctional process by which a good political order is perverted into evil one and a monarchy into a despotism. According to Rosseau, political corruption is a necessary consequence of the struggle for power. Then he argued “that man had been corrupted by social and political life. It is not the corruption of man which destroyed the political system but the political system which corrupts and destroys man.” Arnold Heidenheimer (1993 p. 25) There is an agreement between the views of Rosseau and Lord Acton that “all powers tend to corrupt and absolute power corrupts absolutely.”
Jacob Van Klavaren (1954, p.25) defines corruption as the exploitation of the public. And he brought a very interesting explanation taking a public official as an economic subject who, as every economic subject, tries to miximise his gain or income.
Forms of corruption include but not limited to:
The misuse of public property and funds. Control of property provides opportunities for mismanagement and corruption. An extreme form is the large-scale “spontaneous” privatization of state assets by enterprise managers and other officials in some transition economies. According to Leslie Holmes (1999, p.5) the process of privatization which is ultimately implemented by the state provides new opportunities to state officials. They can demand or request bribes and kickbacks from private agents interested in purchasing a formerly state-owned business.
Theft of government financial resources is another form of corruption, officials may pocket tax revenues or fees (often with the collusion of the payer, in effect combining theft with bribery) steal cash from treasures, extend advances to themselves that are never repaid, or draw pay for fictitious “ghost” workers, a pattern well documented in the reports of audit authorities.
Robert Thobabeen (1991, p.63) brings another form of corruption; Influence Peddling when individuals with access to people in high places are sometimes tempted to trade on the influence of high ranking government officials. “There is money to be made through sale of access, the arrangement of contracts and timely intervention to secure favorable disposition of regulatory decisions and government contract.
Patronage is another form of corruption. The assignment of government positions to political supporters has long been a practice in politics. While civil service regulations at the national and state level may effectively curtail the number of patronage jobs, political appointments remain at the top levels of government and provide a legitimate way for elected politicians to influence bureaucracy through the appointment of legal executive officials. The process becomes corrupt when appointees are expected to pay for their jobs. The custom of rewarding wealthy campaign contributors with appointments as ambassadors has been traditional in presidential politics for a long time.
Though some scholars argue that some levels of corruption may encourage the economic growth, most scholars agree that high levels of corruption have very harmful effects on economic and socio-political development of a country, since high scale corruption reduces the efficiency of public spending, raise the budget deficit, reduce budget revenues, dissipate political legitimacy and hinder the democratic development.
Corruption is a crime of opportunity. As noted above the presence of dysfunctional and onerous regulations and poorly formulated policies, often creates incentives for individuals and businesses to short-circuit them through the paying of bribes.
Corruption undermines government revenue and, therefore, limits the ability of the government to invest in productivity-enhancing areas. Where corruption is endemic, individuals will view paying taxes as a questionable business proposition. There is a delicate tension between the government in its role as tax collector and the business community and individuals as tax payers.
The system works reasonably well when those who pay taxes feel that there is a good chance that they will see a future payoff, such as improvements in the country’s infrastructure, better schools, hospitals and a better-trained and healthier workforce. Corruption sabotages this implicit contract and when it is allowed to flourish taxpayers will feel justified in finding creative ways to avoid paying taxes or, worse, become bribers themselves.
But political corruption isn’t just about election rigging. It can lead politicians in office to steer away from good governmenance. Their decisions can benefit those who fund them. The public interest comes second. Political corruption can divert scarce resources from poor and disadvantaged people. This is especially common in countries where democratic institutions are weak or absent. Private rather than public interests dictate policy.
Since corruption undermines revenue, it adversely affects government efforts to reduce poverty. Money that leaks out of the budget because of corruption will not be available to lighten the burden of the poor, thus affecting social development.
(Tanzi and Daavoodi 1997) argued that Corruption distorts the decision-making connected with public investment projects because large capital projects provide tempting opportunities for corruption. Governments will often undertake projects of a larger scope or complexity than warranted by the needs of the country. Public investment will thus be higher—the world is littered with the skeletons of white elephants, often built with external credits, and representing a heavy burden on meager budgets.
Corruption discourages private-sector development and innovation and encourages inefficiency. Budding entrepreneurs with bright ideas will be intimidated by the bureaucratic obstacles, financial costs and psychological burdens of starting new business ventures and will either opt for taking their ideas to some other less corrupt country or, more likely, desist altogether. In either case, economic growth is adversely affected. The high incidence of corruption will mean an additional financial burden on businesses, undermining their international competitiveness.
Corruption contributes to a misallocation of human resources. To sustain a system of corruption, officials and those who pay them will have to invest time and effort in the development of certain skills, nurture certain relationships, and build up a range of supporting institutions and opaque systems, such as off-the-books transactions, secret bank accounts, and the like.
Because corruption is a betrayal of trust, it diminishes the legitimacy of the state and moral stature of the bureaucracy in the eyes of the population. While efforts will be made to shroud such corrupt transactions in secrecy, particularly when the opportunities for bribery are linked to some government-inspired initiative, the relevant details will leak out and will tarnish the reputation of the government, thereby damaging its credibility and limiting its ability to become a constructive agent of change.
The effect of corruption on the social fabric of society is the most damaging of all. It undermines people’s trust in the political system, in its institutions and its leadership. Frustration and general apathy among a disillusioned public result in a weak civil society. This in turn clears the way for despots as well as democratically elected yet unscrupulous leaders to turn national assets into personal wealth. Demanding and paying bribes become the norm.
Corruption also increases the operating cost of government and therefore reduces the resources available for other uses, including the financing of social spending that is crucial to the formation of human capital. In fact, higher corruption is found to be associated with lower education and health spending. According to quantitative analysis made by Mauro Paolo (1997) government expenditure on education is negatively and significantly associated with higher levels of corruption.
An estimate by the World Bank (2013) puts the total amount of bribes paid in both developing and developed countries in 2001/2002 at 1 trillion dollars, about 3 % of world GDP at the time. This estimate does not include embezzlement of public funds or theft of public assets, which are extremely difficult to estimate, although it is known by now that deposed kleptocrats in Indonesia, Nigeria, and Zaire for example embezzled tens of billions of dollars while in office.
Corruption may dissipate the important asset of political legitimacy, which most governments seek to preserve and build on. One of the major tasks of any regime is the building of its own legitimacy a resource which will enable it to gain more easily the support and the assistance of the public in connection with development. By destroying the legitimacy of political structure in the eyes of those who have power to do something about the situation; corruption can contribute to instability and possible national disintegration.
