Corruption
Corruption is a form of dishonesty or a criminal offense which is undertaken by a person or an organization which is entrusted in a position of authority, in order to acquire illicit benefits or abuse power for one's personal gain. Corruption may involve many activities which include bribery, influence peddling and embezzlement and it may also involve practices which are legal in many countries.[1] Political corruption occurs when an office-holder or other governmental employee acts with an official capacity for personal gain. Corruption is most common in kleptocracies, oligarchies, narco-states, and mafia states.
"Corrupt" redirects here. For other uses, see Corrupt (disambiguation).Corruption and crime are endemic sociological occurrences which appear with regular frequency in virtually all countries on a global scale in varying degrees and proportions. Recent data suggests corruption is on the rise.[2] Each individual nation allocates domestic resources for the control and regulation of corruption and the deterrence of crime. Strategies which are undertaken in order to counter corruption are often summarized under the umbrella term anti-corruption.[3] Additionally, global initiatives like the United Nations Sustainable Development Goal 16 also have a targeted goal which is supposed to substantially reduce corruption in all of its forms.[4]
Measurement[edit]
Several organizations measure corruption as part of their development indexes. The Corruption Perceptions Index (CPI) ranks countries "by their perceived levels of public sector corruption, as determined by expert assessments and opinion surveys." The index has been published annually by the non-governmental organization Transparency International since 1995.[112] On the supply side, Transparency International used to publish the Bribe Payers Index, but stopped in 2011.
The Global Corruption Index (GCI), designed by the Global Risk Profile to be in line with anti-corruption and anti-bribery legislation, covers 196 countries and territories. It measures the state of corruption and white-collar crimes around the world, specifically money laundering and terrorism financing.[113]
Absence of corruption is one of the eight factors[114] the World Justice Project[115] Rule of Law Index[116] measures to evaluate adherence to the rule of law in 140 countries and jurisdictions around the globe. The annual index measures three forms of government corruption across the executive branch, the judiciary, the military and police, and the legislature: bribery, improper influence by public or private interests, and misappropriation of public funds or other resources.[117]
Relationship to economic growth[edit]
Corruption can negatively impact the economy both directly, through for example tax evasion and money laundering, as well as indirectly by distorting fair competition and fair markets, and by increasing the cost of doing business.[118] It is strongly negatively associated with the share of private investment and, hence, it lowers the rate of economic growth.[119]
Corruption reduces the returns of productive activities. If the returns to production fall faster than the returns to corruption and rent-seeking activities, resources will flow from productive activities to corruption activities over time. This will result in a lower stock of producible inputs like human capital in corrupted countries.[119]
Corruption creates the opportunity for increased inequality, reduces the return of productive activities, and, hence, makes rent-seeking and corruption activities more attractive. This opportunity for increased inequality not only generates psychological frustration to the underprivileged but also reduces productivity growth, investment, and job opportunities.[119]
Some expert have suggested that corruption actually stimulated economic growth in East and Southeast Asian countries. An often cited example is South Korea, where president Park Chung Hee favoured a small number of companies, and later used this financial influence to pressure these chaebol to follow the government's development strategy.[120][121] This 'profit-sharing' corruption model incentivizes government officials to support economic development, as they would personally benefit financially from it.[118][122]
The Foreign Corrupt Practices Act (FCPA, USA 1977) was an early paradigmatic law for many western countries i.e. industrial countries of the OECD. There, for the first time the old principal-agent approach was moved back where mainly the victim (a society, private or public) and a passive corrupt member (an individual) were considered, whereas the active corrupt part was not in the focus of legal prosecution. Unprecedented, the law of an industrial country directly condemned active corruption, particularly in international business transactions, which was at that time in contradiction to anti-bribery activities of the World Bank and its spin-off organization Transparency International.
As early as 1989 the OECD had established an ad hoc Working Group in order to explore "the concepts fundamental to the offense of corruption, and the exercise of national jurisdiction over offenses committed wholly or partially abroad."[127] Based on the FCPA concept, the Working Group presented in 1994 the then "OECD Anti-Bribery Recommendation" as precursor for the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions[128] which was signed in 1997 by all member countries and came finally into force in 1999. However, because of ongoing concealed corruption in international transactions several instruments of Country Monitoring[129] have been developed since then by the OECD in order to foster and evaluate related national activities in combating foreign corrupt practices. One survey shows that after the implementation of heightened review of multinational firms under the convention in 2010 firms from countries that had signed the convention were less likely to use bribery.[130]
In 2013, a document[131] produced by the economic and private sector professional evidence and applied knowledge services help-desk discusses some of the existing practices on anti-corruption. They found:
In recent years, anti-corruption efforts have also been criticised for overemphasising the benefits of the eradication of corruption for economic growth and development,[133][134][135][136] following a diversity of literature which has suggested that anti-corruption efforts, the right kind of institutions and "good governance" are key to economic development.[137][138] This criticism is based on the observed fact that a variety of countries, such as Korea and China but also the US in the 19th and early 20th century, saw high economic growth and broader socio-economic development coinciding with significant corruption [139][140]