Effects of Corruption on Governance and Development 1

THE EFFECT OF CORRUPTION ON GOVERNANCE AND DEVELOPMENT

THE EFFECTS OF CORRUPTION ON GOVERNANCE AND DEVELOPMENT

NYAGUTHII STEPHEN MAINA

SNYAST2211

UNIVERSITY OF EASTERN AFRICA, BARATON

 Effects of Corruption on Governance and Development 2

Abstract

Corruption is a widespread challenge that significantly undermines economic development,

erodes public trust, and perpetuates inequality. This paper examines the multiple dimensions of

corruption, exploring its causes, effects, and potential mitigation strategies. A thorough review of

the existing literature on corruption within both the public and private sectors highlights how

corrupt practices obstruct progress and contribute to systemic failures in governance and

development. Additionally, the paper discusses various strategies for combating corruption,

emphasizing the importance of transparency, accountability, and institutional reforms. It

provides recommendations for addressing corruption at local, national, and global levels.
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OUTLINE

1. Introduction

2. Corruption and Governance

2.1. Erosion of Institutions

2.2. Decreased Accountability and Transparency

2.3.Weakening of the Rule of Law

2.4. Political Instability and Social unrest

3. Corruption and Economic Development

3.1. Impact on Economic Development

3.2. Hindering Infrastructure Development

3.3. Market Distortion and Inefficiencies

3.4. Increased Poverty and Inequality

4. Anti-corruption measures

4.1.Global Frameworks and Institutions

4.2. Domestic Anti-Corruption Strategies

4.3. The Importance of Civil Society and Journalism

4.4. Obstacles and Future Approaches

5. Conclusion References

1. Introduction
Corruption, commonly understood as the misuse of authority for personal benefit, is a

complex issue that continues to confront governments, businesses, and societies on a global
 Effects of Corruption on Governance and Development 4

scale. It appears in various forms, including bribery, nepotism, embezzlement, and favoritism.

Although corruption is not confined to any specific region, its impacts are particularly

detrimental in developing countries, where institutional vulnerabilities create a conducive

environment for corrupt activities. The repercussions of corruption encompass hindering

economic development, perpetuating inequality, distorting political processes, and diminishing

public trust in governmental institutions. This paper seeks to explore the origins and impacts of

corruption, assess its implications for governance and development, and investigate potential

strategies for addressing this pervasive challenge.

2. Corruption and Governance

Governance pertains to the frameworks and procedures that allow a society to manage its

resources, uphold laws, and deliver services to its citizens. Effective governance is characterized

by transparency, accountability, and responsiveness to the needs of the populace. Corruption

jeopardizes these principles by distorting the conduct of government officials and public

servants.

2.1.Erosion of Institutions

Corruption diminishes institutional integrity by enabling public officials to place their

personal interests above the welfare of the public. (Shleifer and Vishny ,1993) note that

corruption is particularly harmful when it becomes systematic, as it incentivizes government

agents to act out of self-interest rather than serve the community. For instance, public sector

officials may solicit bribes to authorize permits, or politicians might steer government contracts

toward their relatives or associates, resulting in a misallocation of resources.

 Effects of Corruption on Governance and Development 5

2.2. Decreased Accountability and Transparency

A significant adverse effect of corruption on governance is the decline of accountability.

As public officials indulge in corrupt activities without the fear of legal consequences, the state’s

capacity to enforce laws and hold individuals accountable weakens. This is observable in

instances where regulatory bodies, judicial systems, and law enforcement agencies are either

ineffective or supportive of corrupt practices. For example, in many developing nations,

government bodies established to combat corruption, such as anti-corruption commissions,

frequently lack the power or independence needed to investigate high-ranking officials.

Consequently, citizens lose confidence in their leaders and the efficacy of democratic

institutions.

2.3.Weakening of the Rule of Law

The rule of law is vital for safeguarding rights, maintaining order, and ensuring justice.

Corruption undermines legal frameworks by swaying court decisions, resulting in biased

outcomes favoring those who can afford to pay bribes. In countries plagued by judicial

corruption, for example, individuals who possess power or wealth can avoid penalties for illegal

actions, further entrenching inequality and weakening the legitimacy of the legal system.

Transparency International's Corruption Perceptions Index (CPI) consistently ranks nations like

Somalia and South Sudan among the lowest in governance quality due to rampant corruption.

2.4. Political Instability and Social Unrest

The effects of corruption on governance also impact political stability. As corruption

intensifies, the legitimacy of governments declines, often resulting in public discontent and

turmoil. A notable example is the widespread corruption scandals involving former South
 Effects of Corruption on Governance and Development 6

Korean President Park Geun-hye, which led to her impeachment in 2017 following large-scale

protests by the public demanding accountability. Such incidents underscore the vulnerability of

political systems where corruption erodes public trust in leadership, leading to significant

political repercussions.

3. Corruption and Economic Development

Corruption significantly impacts economic development, obstructing both national and global

efforts to attain sustainable progress. It generates inefficiencies, suppresses competition, and

results in the improper allocation of resources that could be utilized for more productive

endeavors.

3.1.Effects on Economic Growth

Mauro (1995) discovered a negative relationship between corruption and economic growth,

especially in developing nations. Corruption increases business costs by necessitating informal

payments, which redirect resources from productive pursuits. Firms required to pay bribes for

contracts or regulatory permissions encounter higher operational expenses, which diminish their

profitability and market position. Consequently, this deters foreign direct investment (FDI), as

global investors tend to avoid countries with significant corruption risks.

3.2.Hindering Infrastructure Development

Corruption frequently misappropriates public funds allocated for crucial infrastructure projects,

leading to poorly executed initiatives such as roads, educational institutions, and healthcare
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facilities. As noted by Gupta, Davoodi, and Alonso-Terme (2002), money intended for public

services is embezzled by corrupt officials, resulting in subpar public infrastructure and

insufficient services. For instance, in Nigeria, vast sums of money designated for infrastructure

development have been misused, causing serious deficiencies in healthcare, education, and

transportation services.

3.3.Market Distortion and Inefficiencies

The economic impacts of corruption reach into market inefficiencies. In corrupt environments,

businesses that do not engage in bribery can be excluded from government contracts, while

favored firms receive lucrative agreements even when their offers are less competitive. This

skews market dynamics and leads to the accumulation of economic power among a select few,

undermining the principles of fair competition and open markets. Consequently, economies often

feature monopolies or oligopolies, where a limited number of companies dominate substantial

portions of the economy, restricting consumer options and stifling innovation.

3.4.Increased Poverty and Inequality

Corruption worsens poverty levels by diverting funds from essential social programs aimed at

alleviating inequality. In numerous developing countries, corrupt activities lead to reduced

financial allocations for health, education, and welfare services, disproportionately impacting the

low-income population. As public resources are misappropriated, the standard of these services

declines, widening the divide between the affluent and the impoverished. Research demonstrates

that corruption in public procurement and the allocation of social welfare resources frequently

favors the wealthy, leaving disadvantaged communities lacking access to vital services (Gupta et

al., 2002).
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4. Anti-Corruption Initiatives

Both international and national efforts have been made to tackle corruption. Despite certain

obstacles, substantial progress has been achieved in addressing corruption on a global scale.

4.1.Global Frameworks and Institutions

International entities such as the United Nations (UN), the World Bank, and Transparency

International are vital in facilitating anti-corruption efforts. The UN Convention Against

Corruption (UNCAC), which was adopted in 2003, stands as the only legally binding universal

instrument targeting corruption. It lays out a thorough framework for both preventing and

fighting corruption, which includes measures to criminalize corrupt practices, enhance law

enforcement, and encourage transparency.

4.2.Domestic Anti-Corruption Strategies

National administrations have taken various steps to combat corruption by creating independent

anti-corruption agencies, passing anti-bribery legislation, and establishing public transparency

initiatives. For example, nations like Singapore and Hong Kong have implemented strong

systems for identifying and averting corruption. Nonetheless, the success of these initiatives

often hinges on political commitment, the robustness of judicial processes, and the autonomy of

regulatory bodies.

4.3.The Importance of Civil Society and Journalism

Organizations in civil society and the press are crucial in the fight against corruption.

Transparency International, for instance, has played a key role in increasing awareness about the

risks associated with corruption and advocating for clear and accountable practices. A free and
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independent media serves as a potent means for uncovering corrupt actions. Investigative

journalism has revealed numerous significant corruption scandals, such as the Panama Papers,

which exposed widespread tax avoidance and corruption among global leaders.

4.4. Obstacles and Future Approaches

Although there have been some achievements in the battle against corruption, numerous

challenges persist. Insufficient political commitment, established interests, and weak

enforcement methods continue to obstruct progress. To effectively address corruption, nations

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need to bolster legal structures, enhance transparency, empower civic organizations, and

cultivate a culture of accountability.

5. Conclusion

Corruption is a complex issue with extensive repercussions for governance, economic growth,

and societal well-being. Its impacts are deeply ingrained in the political, economic, and social

frameworks of nations, obstructing development and sustaining inequality. Tackling corruption

requires thorough approaches that tackle both its underlying causes and its various forms.

Although notable advancements have been achieved worldwide, ongoing efforts are essential to

ensure government accountability, the efficient use of public resources, and the ability of

societies to prosper in a climate of equity and transparency.

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Gupta, S., Davoodi, H., & Alonso-Terme, R. (2002). Does corruption affect income inequality
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Mauro, P. (1995). Corruption and growth. The Quarterly Journal of Economics, 110(3), 681-712.
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