HL2 ECONOMICS CORRUPTION & ECONOMIC DEVELOPMENT DEVELOPMENT ECONOMICS

What is corruption in development economics? Corruption is defined as the dishonest exploitation of power for personal gain. It poses a huge challenge for both growth and development

Where/When is Corruption most prevalent? Governments that are not accountable to the people, especially military governments. Governments that spend large amounts on large scale capital investment projects. Official accounting practices are not well formulated or controlled. Government officials are not well paid Political elections are not well controlled or non-existent. The Legal structure is weak. Freedom of speech is lacking.

Different Forms of Corruption Bribery Extortion Fraud Patronage Influence Peddling Nepotism

What is Nepotism? Brainstorm country specific examples

The Negative Impacts of Corruption Electoral Corruption may involve the implementation of polices which are not supported by the majority. The legal system may be compromised – people buy their way out of trouble. Corruption leads to unfair allocation of resources. If contracts go to the highest bidder rather than the most efficient producer, market failure might occur. Bribes increase the cost of business.

The Negative Impacts of Corruption Corruption reduces trust in an economy. It may be harder to attract foreign investment. (FDI) Corruption increases the risks of contracts not being honored, which again could impact FDI. Corruption means that officials will often divert public investment into capital projects where bribes are more likely. Corruption often means that officials turn a blind eye to regulations, such as those involving construction and the environment.

The Negative Impacts of Corruption Monetary gains from corruption are often moved out of the country. This capital flights reduces the capital available for internal investment. The constant paying of small bribes reduces the economic well-being of the ordinary citizen.

Measuring Corruption: The Corruption Perceptions Index (CPI)

Source: http://www.dw.com/en/rise-in-populism-risks-worsening-corruption-warns-transparency-watchdog/a-37261950

Corruption Perception Index (CPI) http://www. transparency At the following website answer the following: Where is your country of citizenship on the list? Has its performance improved or deteriorated in recent years? Download a report on your country. Write a summary paragraph on the major trend-issues in your country. What corruption scandals have occurred in your country in the last 12 months? Explain how the CPI Index is calculated.

MAJOR CORRUPTION SCANDALS IN 2016/2017 Odebrecht is a major Brazilian construction MNC with global operations. Explain its involvement with bribing governments.