Summaries of Literature on Costs of Corruption Query: “I would initially like to know more on literature that examines the human costs of corruption (personal suffering), the development costs (GDP growth, resources misallocated, etc) and the costs to business (increased risk, lost contracts, etc).“
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Part 1: Part 2:
Part 1:
Introduction Literature survey and summaries
Introduction
This draft U4 Expert Answer mostly unearths literature on business and development costs of corruption, but also includes literature on human costs of corruption.
Part 2:
Literature Survey and Summaries
The economic costs of corruption vary according to the scale and frequency of corrupt transactions and on which part of the economy and population are most affected by it. In principle, corruption acts as an unofficial tax on consumers and producers and those least able to pay, the poor, suffer the most from its regressive impact. The macroeconomic costs are hard to assess because it is difficult to measure how much corruption there is and because it is hard to establish a robust causal link between levels of corruption and levels of economic performance. But many economists agree that there are significant correlations between high levels of corruption and a range of negative economic consequences including: • Creating inefficiencies in the operation of markets. • Distorting the composition of public expenditure by focusing spending on activities likely to yield large bribes, for example, major public construction works and defence contracts. • Reducing the level of direct foreign investment by adding costs and creating uncertainty. Petty corruption imposes disproportionate costs on the poor but its wider economic costs are limited. Large scale or grand corruption can destroy the economy and impoverish entire populations.
www.U4.no www.transparency.org www.cmi.no Authored by: Victoria Jennett PhD U4 Helpdesk Transparency International vjennett@transparency.org Reviewed by: Robin Hodess PhD Transparency International rhodess@transparency.org Date: 08 June, 2007