APPLIED ECONOMICS PREPARED BY: JOHN CHRISTIAN HABERLE

1. “CORRUPTION”
Prepared By:
John Christian Haberle

2. “
”

3. CORRUPTION IS…
 Corruption is both a major cause
and a result of poverty around the
world. It occurs at all levels of
society, from local and national
governments, civil society,
judiciary functions, large and
small businesses, military and
other services and so on.

4.  Corruption affects the poorest the
most, in rich or poor nations,
though all elements of society are
affected in some way as
corruption undermines political
development, democracy,
economic development, the
environment, people’s health and
more.

5. MAIN CAUSES OF
CORRUPTION

6. Low Pay Scales/Wages
Most of the employees in
government sector are
paid low wages and
salaries. Hence some
employees revert to
corruption for more
financial benefits.

7. Low Job Opportunities
 This is another cause of
corruption. Due to lack of job
opportunities at will, there are
many people who like to go for
corruption mode to get the job
offer. They will be ready to pay
lump some amounts for the job
offer to the higher officials or
politicians.

8. Lack of Strict and fast punishments
 Even if someone is found guilty or even caught red-handed by
the anti-corruption officials or media, the convicts get less
punishment. First they will be suspended for few months or
weeks and then re-posted to another location with same Job
grade and pay. So this means the official who did the corrupt
practice is given a free license to continue his practice.
 If the government is so strict that any such corrupt incidents
will lead to permanent removal from job and also punishment
like several years imprisonment then the corruption will come
down to a large extent.

9. Lack of ill fame
 If a person is found to be corrupt or has
done some unacceptable misconduct, he or
she has to be avoided and not be
respected. But in India those with
corruption and other offense related
history are given prominent positions like
the member of parliament or even higher
posts. Instead of being disrespected they
are respected.

10. Lack of Unity in Public
 Public openly criticize corruption but
interestingly there is no unity among the
public to stop corruption. If a person
wants to get his done his work, he gets it
done by corruption means if possible and
then later criticizes the corrupt official.
If the public stands united against
corruption in such a way that no one is
ready to offer bribes to get their work
done then the corrupt officials will have
no other option but to work in corruption
free manner.

11. Lack of transparency in affairs and
deals
 Many seat selection processes like in
education, contracts for job, employee
income reports (wealth possession), etc.
lack transparency. For this purpose, there is
a new act namely RTI : right to
information, but the act is not strong
enough to prevent malpractices.

12. Lack of Independent Detective Agency
 India has no independent detective agency
which can investigate with full power and
freedom to expose the corrupt individuals.
The existing agencies like Central Bureau of
investigation are named by the highest court
of Indian judicial system as a parrot which
indicates how free these investigating
agencies to work. Hence any one who
commits offense will not be so afraid of the
investigation as they can escape from it by
taking help of ruling political party.

13. Option of many political parties
 If the political party wins, then the
members in it will desire to expand
the party to all over the country. To
do so, they need enough financial
reserves. For this, once they come
into power, they opt for corrupt
means to make the wealth needed
to expand the party.

14. Lack of enough powers to the judicial
system and other independent organization
 Like the election commission
cannot ban a politician from
contesting in case they make a
mistake or do not comply with the
rules during election campaign
(like distributing money to people
etc.). Similarly, the judicial system
has low options to punish some one
who is found to be.

15. Lack of Accountability
 In government there is a big trend of
corruption. This is because of lack of
accountability.
The employee’s on government offices
do not perform to their par excellence.
If they receive 100 files to be cleared
in a week they may not even clear
50 of them in that week.
They tend to post-pone the clearance
of the files. So those who are in urgency of the clearance have to get
them done by rewarding the officials involved in the clearance
office.
This lack of accountability in government offices is chief cause of
corruption.

16. Encouragement of unhealthy
competition
 Competition in business is a good sign for
quality of service to be delivered. When
there is a tender, you can notice that only
few companies bid for it. This is because
the companies having political relations
have higher chances of winning while
others do not. So, companies with no
political influence will not bid for the
tender in-spite of being a good company.
That is here the number of bidders for a
tender will be low due to political
interference.

17. EFFECTS OF
CORRUPTION ǁ
ON PEOPLE, SOCIETY
AND ECONOMY

18.  Impact of corruption is very hard on public life.
This is more of awkward and defaming condition
than being problematic. But it appears that the
corruption is ever rising and unstoppable. Further,
the people involved in corruption seem to be
hiding by blaming others. Even they are proud of
themselves as they made more money in short
time. To worsen the condition further, those
involved in corruption are able to get better
promotions and opportunities. People also have
developed an opinion that it is the only way to
get their work done. If not, the work will be
pending for long or even might not be done.

19. EFFECTS OF
CORRUPTION ON
PEOPLE

20. Lack of quality in services
 In a system with corruption, there is no
quality of service. To demand quality one
might need to pay for it. This is seen in many
areas like municipality, electricity,
distribution of relief funds etc. If a person
has to purchase a like medicine, due
to corruption in education then the candidate
after completion of his course will not like to
provide quality health service if there is not
enough remuneration for his
service. Further candidates who do not have
the ability can also get into the same seat by
purchasing it. So though he becomes a
medical practitioner, he may not be
competent enough.

21. Lack of proper justice
 Corruption in the judiciary system, leads
to improper justice. And the victims of
offense might suffer. A crime may be
proved as a benefit of the doubt due to
lack of evidence or even the evidence
erased. Due to corruption in the police
system, the investigation process goes on
for decades. This lets the culprits roam
free and even perform more crimes.
There are even chances that criminals due
to old age due to the delayed
investigation. So it leads to a sense of
“Justice delayed is justice denied.”

22. Chances of Unemployment
 This we can see with an example. The private
education and training institutes are given
permits to start providing education. This permit
is given based on the infrastructure and sufficient
recruitment of eligible staff. Here there are good
chances of corruption. The institute or college
managements try to bribe the quality inspectors
so as to get permits. Though there is no sufficient
eligible staff these institutes get permission from
the inspectors leading to unemployment. Instead
of 10 faculties, a college is run by 5. So, even if
well-qualified persons wish to get a job there,
they will not be offered. If there was no
corruption by inspectors, then there would be a
chance for more employment.

23. Poor Health and hygiene
 In countries with more corruption one can
notice more health problems among
people. There will be no fresh drinking
water, proper roads, quality food grains
supply, milk adulteration, etc.
 These low-quality services are all done to
save money by the contractors and the
officials who are involved. Even the
medicine provided in hospitals for the
hospitals are of sub-standard quality. So
all these can contribute to the ill health of
common man.

24. Pollution
 Mostly emitted in the form of water
pollution, air pollution, and land pollution.
This pollution is from vehicles and factories.
The governments have a monitor on this
pollution by regular check of vehicle
emissions and also industrial exhausts.
 Corruption in the government department
lets the industry people opt to release of
untreated and harmful waste into rivers and
air. If there is no corruption, there can be
fair probes. Then the industry personnel will
treat the waste such that it is less toxic and
harmless to environment and people in it.
So we can mean that corruption is also the
main cause of pollution.

25. Accidents
 Sanction of driving license
without proper check of
driving skills in the driver
leads to accidents and
death. Due to corruption,
there are countries where
one can driving license
without any tests.

26. Failure of genuine
research
 Research by individuals needs government
funding. Some of the funding agencies have
corrupt officers. These people sanction the
funds for research to those investigators who
are ready to bribe them. In doing so, they do
not sanction the funds to genuine and
hardworking investigators. Thus the research
and development will be lagging. This seems to
be not a problem for the common public. But if
we notice the resistance of microbes to drugs,
we can know that there were no new
compounds discovered in the past few decades
for the efficient treatment of resistant
microbes.

27. Effects of
Corruption on
Society

28. Disregard for officials
 People start disregarding the official
involved in corruption by talking
negatively about him. But when they
have work with him or her, they again
approach them by a thought that the
work is done if some monetary benefits
are provided. Disregard towards
officials will also build distrust. Even
lower grade officer will be disrespectful
to higher grade officer. So even he may
not obey his orders. There were even
incidents where a lower grade police
officer kidnapped higher grade officer
for not offering him leave when asked.

29. Lack of respect for rulers
 Rulers of the nation like the president
or prime ministers lose respect among
the public. Respect is main criteria in
social life. People go for voting during
election not only with the desire to
improve their living standards by the
election winner but also with respect
for the leader. If the politicians are
involved in corruption, people knowing
this will lose respect for them and will
not like to cast their vote for such
politicians.

30. Lack of faith and trust in the
governments
 People vote to a ruler
based on their faith in
him/ her. But if found
to be involved in
corruption people lose
faith in them and may
not vote next time.

31. Effects of
Corruption on
Economy

32. A decrease in foreign
investment
 There are many
incidents wherein
foreign investments
which were willing to
come to India have
gone back owing to
heavy corruption in
the government
bodies.

33. Delay in growth
 Due to desire to mint money and other unlawful benefits,
the official who needs to pass the clearances for projects
or industries delay the process. A work which can be done
in few days may be done in a months time. This leads to
delay in investments, starting of industries and also
growth. Even if started, company growth hinders as every
work linked to officials get delayed due to need to
provide bribes or other benefits

34. Lack of development
 Many new
industries willing to
get started in particular reg
ion change their plans if
the region is unsuitable. If
there are no proper roads,
water, and electricity, the
companies do not wish to
start up there.
This hinders the economic
progress of that region.

35. The 5 key
ingredients to stop
Corruption

36. END IMPUNITY
 Effective law enforcement is essential
to ensure the corrupt are punished
and break the cycle of impunity, or
freedom from punishment or loss.
 Successful enforcement approaches
are supported by a strong legal
framework, law enforcement
branches and an independent and
effective court system. Civil society
can support the process with
initiatives such as Transparency
International’s Unmask the Corrupt
campaign.

37. REFORM PUBLIC ADMINISTRATION AND
FINANCE MANAGEMENT
 Reforms focusing on improving financial
management and strengthening the role
of auditing agencies have in many
countries achieved greater impact than
public sector reforms on curbing
corruption.
 One such reform is the disclosure of
budget information, which prevents
waste and misappropriation of
resources. For example, Transparency
International Sri Lanka promotes
transparent and participatory budgeting
by training local communities to
comment on the proposed budgets of
their local government.

38. PROMOTE TRANSPARENCY AND ACCESS
TO INFORMATION
 Countries successful at curbing
corruption have a long tradition of
government openness, freedom of the
press, transparency and access to
information. Access to information
increases the responsiveness of
government bodies, while simultaneously
having a positive effect on the levels of
public participation in a country.
 Transparency International Maldives
successfully advocated for the adoption
of one of the world’s strongest rights to
information law by putting pressure on
local MPs via a campaign of SMS text
messages.

39. EMPOWER CITIZENS
 Strengthening citizens demand for anti-
corruption and empowering them to hold
government accountable is a sustainable
approach that helps to build mutual trust
between citizens and government. For
example, community monitoring initiatives
have in some cases contributed to the
detection of corruption, reduced leakages
of funds, and improved the quantity and
quality of public services.
 To monitor local elections, Transparency
International Slovenia produced an
interactive map that the public populated
with pictures and reports of potential
irregularities in the election. As a result,
cases of public funds being misused to
support certain candidates were spotted.

40. CLOSE INTERNATIONAL LOOPHOLES
 Without access to the international financial system,
corrupt public officials throughout the world would
not be able to launder and hide the proceeds of
looted state assets. Major financial centers urgently
need to put in place ways to stop their banks and
cooperating offshore financial centers from
absorbing illicit flows of money.
 The European Union recently approved the 4th Anti-
Money Laundering Directive, which requires EU
member-states to create registers of the beneficial
owners of companies established within their
borders. However, the directive does not require
these registers to be made public. Similarly, the
Norwegian, UK, and Ukrainian governments have all
approved legislation requiring companies to disclose
information about their owners, although these have
yet to come into force.

41. “
”
Thank
you