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Corruption and Economic Development Corruption is a complex phenomenon. Its roots lie deep in bureaucratic and political institutions, and its effect on development varies with country conditions.
But while costs may vary and systemic corruption may coexist with strong economic performance, world bank doing business report 2008 gmc suggests that corruption is bad for development.
This chapter looks at the complex nature of corruption, its causes, and its effects on development. How do we define corruption? The term corruption covers a broad range of human actions.
To understand its effect on an economy or a political system, it helps to unbundle the term by identifying specific types of activities or transactions that might fall within it. In considering its strategy the Bank sought a usable definition of corruption and then developed a taxonomy of the different forms corruption could take consistent with that definition.
It is also abused when private agents actively offer bribes to circumvent public policies and processes for competitive advantage and profit. Public office can also be abused for personal benefit even if no bribery occurs, through patronage and nepotism, the theft of state assets, or the diversion of state revenues.
This definition is both simple and sufficiently broad to cover most of the corruption that the Bank encounters, and it is widely used in the literature.
Bribery occurs in the private sector, but bribery in the public sector, offered or extracted, should be the Bank's main concern, since the Bank lends primarily to governments and supports government policies, programs, and projects.
Bribes are one of the main tools of corruption. They can be used by private parties to "buy" many things provided by central or local governments, or officials may seek bribes in supplying those things.
Bribes can influence the government's choice of firms to supply goods, services, and works, as well as the terms of their contracts. Firms may bribe to win a contract or to ensure that contractual breaches are tolerated. Bribes can influence the allocation of government benefits, whether monetary benefits such as subsidies to enterprises or individuals or access to pensions or unemployment insurance or in-kind benefits such as access to certain schools, medical care, or stakes in enterprises being privatized.
Bribes can be used to reduce the amount of taxes or other fees collected by the government from private parties. Such bribes may be proposed by the tax collector or the taxpayer.
In many countries the tax bill is negotiable. Bribes may be demanded or offered for the issuance of a license that conveys an exclusive right, such as a land development concession or the exploitation of a natural resource.
Sometimes politicians and bureaucrats deliberately put in place policies that create control rights which they profit from by selling.
Bribes may be offered to speed up the government's granting of permission to carry out legal activities, such as company registration or construction permits. Bribes can also be extorted by the threat of inaction or delay.
Bribes can change the outcome of the legal process as it applies to private parties, by inducing the government either to ignore illegal activities such as drug dealing or pollution or to favor one party over another in court cases or other legal proceedings.
The government benefits purchased with bribes vary by type and size. Contracts and other benefits can be enormous grand or wholesale corruption or very small petty or retail corruptionand the impact of misinterpretation of laws can be dramatic or minor. Grand corruption is often associated with international business transactions and usually involves politicians as well as bureaucrats.
The bribery transaction may take place entirely outside the country. Petty corruption may be pervasive throughout the public sector if firms and individuals regularly experience it when they seek a license or a service from government. The bribes may be retained by individual recipients or pooled in an elaborate sharing arrangement.
The sums involved in grand corruption may make newspaper headlines around the world, but the aggregate costs of petty corruption, in terms of both money and economic distortions, may be as great if not greater. Theft of state assets by officials charged with their stewardship is also corruption.
An extreme form is the large-scale "spontaneous" privatization of state assets by enterprise managers and other officials in some transition economies. At the other end of the scale is petty theft of items such as office equipment and stationery, vehicles, and fuel.
The perpetrators of petty theft are usually middle- and lower-level officials, compensating, in some cases, for inadequate salaries. Asset control systems are typically weak or nonexistent, as is the institutional capacity to identify and punish wrongdoers.
Theft of government financial resources is another form of corruption. Officials may pocket tax revenues or fees often with the collusion of the payer, in effect combining theft with briberysteal cash from treasuries, extend advances to themselves that are never repaid, or draw pay for fictitious "ghost" workers, a pattern well documented in the reports of audit authorities.Doing Business in China Report.
Google Scholar. International Finance Corporation. (). Doing Business in China Report: Making a difference for entrepreneurs. World Bank. (). Doing business making a difference for entrepreneurs (English). Doing business Washington DC: World Bank Group.
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World Bank: annual 'Doing Business' report; Invest Europe. The auto industry bailout of GM, Ford, and Chrysler cost $80 billion. It's mostly been recovered. The U.S. government’s $ billion bailout of the auto industry lasted from December to December The Chevrolet, Cadillac, GMC, and Buick. The .
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World Investment Report builds on that track record and presents policy light of new digital business models. Some countries have already taken steps Many countries around the world have development strategies for the digital economy.
Yet most of these strategies fail to adequately address investment issues. And those that do tend to.