Corruption has wide-ranging negative effects. It reduces investment and economic growth, increases poverty, and weakens public service delivery. Corruption disproportionately burdens small businesses and the poor. It distorts government spending and economic activity, damages the environment and social welfare, and undermines humanitarian aid efforts. Corruption exists in many sectors including health, education, public safety, trade unions, and sports. Addressing corruption requires considering both public and private sector corruption.

1. EFFECTS OF
CORRUPTION
SUBMITTED BY:
CHINARAJA BARATAM
13BEC0728


2. Basic effects of corruption
• Effects on Investment and growth
• Poverty
• Corruption and service delivery
• Economic Effects
• Environmental and Social effects
• Effects on Humanitarian Aid
• Effects on other sectors : Health, Education, Public
safety, Trade unions etc.
• Effect on small and micro enterprises

3. • It is well established that investment is significantly
affected by the level of uncertainty in the business
environment.
• Weak firms might be more inclined to rely on
administrative corruption as a survival mechanism.
• The effects of state capture on firm performance
show a marked contrast. Where state capture is
reported to be prevalent, firms that pay bribes to
influence the content of laws, decrees, and
regulations show significant increases in sales growth.
• The gains to capture for particular firms appear to be
associated with negative consequences for less
influential firms.
• The issue of the direction of causality could be raised-
capture could directly improve firm performance or
stronger firms could be more likely to engage in
capture.

5. • A strong case can be made that corruption
contributed to the output decline, given its effects
on investment and growth, the weakening of tax
revenues, the misappropriation of credits and
subsidies, and the erosion of public sector services.

6. Poverty
• For so many individuals and families, the most
immediate and visible consequence of the transition
has been a decline in their living standards.
• Poverty rates have remained high as incomes of the
poor have failed to recover and inadequate social
safety nets have left the most vulnerable groups
unprotected.
• Corruption has a direct impact on the living
conditions of the poor.

8. When corruption misdirects the assignment of
unemployment or disability benefits, delays eligibility
for pensions, weakens the provision of basic public
services, it is usually the poor who suffer most. Such
corruption undermines the social safety net and
may deter the poor from seeking basic entitlements
and other public services.
Corruption and Service delivery

9. Effect on small and micro enterprises
Within the economy, corruption is a highly regressive
tax as the BEEPS data demonstrate. Small
enterprises across the region pay, on average, more
than twice as much of their annual revenue in
bribes as do large firms. Such firms are particularly
hard hit by administrative corruption. Micro-
entrepreneurs appear to be prime targets for
corruption. Household surveys in several transition
countries demonstrate that bribery at the household
level is most strongly associated with participation in
a microenterprise. Corruption clearly hinders the
ability of the poor to help themselves out of poverty.

11. Economic Effects
• In the private sector, corruption increases the cost
of business through the price of illicit payments
themselves, the management cost of negotiating
with officials, and the risk of breached agreements
or detection.
• Although some claim corruption reduces costs by
cutting bureaucracy, the availability of bribes can
also induce officials to contrive new rules and
delays.
• Corruption also generates economic distortions in
the public sector by diverting public investment
into capital projects where bribes and kickbacks
are more plentiful.
• Corruption also lowers compliance with
construction, environmental, or other regulations,
reduces the quality of government services and

13. Environmental and Social effects
• Corruption facilitates environmental
destruction.
• Some effects of corruption are social rights
worker protection, unionization prevention,
and child labor.
• While drought and other naturally occurring
events may trigger famine conditions, it is
government action or inaction that determines
its severity, and often even whether or not a
famine will occur.
• Officials often steal state property. Similarly,
food aid is often robbed at gunpoint by
governments, criminals, and warlords alike,

14. • The scale of humanitarian aid to the poor and
unstable regions of the world grows, but it is
highly vulnerable to corruption, with food aid,
construction and other highly valued
assistance as the most at risk.
• Elsewhere, in construction and shelter, there
are numerous opportunities for diversion and
profit through substandard workmanship,
kickbacks for contracts and favoritism in the
provision of valuable shelter material.
• Access to aid may be limited to those with
connections, to those who pay bribes or are
forced to give sexual favors.
Effects on Humanitarian aid

15. Effects on other sectors : Health, Education, Public
safety, Trade unions etc.
In western countries, there have been cases of
bribery and other forms of corruption in all possible
fields:
* Under the table payments made to
reputed surgeons by patients willing to be on top
of the list of forthcoming surgeries.
* Bribes paid by suppliers to the
automotive industry in order to sell poor quality
connectors used for instance in safety equipment
such as airbags.
* Bribes paid by suppliers to
manufacturers of defibrillators (to sell poor quality
capacitors).

16. * Bribes paid to obtain diplomas, financial
and other advantages granted to unionists by
members of the executive board of a car
manufacturer in exchange for employer-friendly
positions and votes, etc.
Corruption can also affect the various components
of sports activities (referees, players, medical and
laboratory staff involved in anti-doping controls,
members of national sport
federation and international committees deciding
about the allocation of contracts and competition
places).

17. * Contributions paid by wealthy parents to the "social and
culture fund" of a prestigious university in exchange for it to
accept their children.
* Ultimately, the distinction between public and private sector
corruption sometimes appears rather artificial and national anti-
corruption initiatives may need to avoid legal and other
loopholes in the coverage of the instruments

20. THANKYOU