Question

What is corruption? In what ways might corruption be damaging to an economy?

Answer 1

Corruption is defined as use of power or money to bypass laws or fair conduct of functioning of laws or policies for private gain.

Corruption has very negative impact on perfect functioning of economy

Some of them are:

1.Reduction in tax collected: Private entities are know to use bribing and other means to alter the data pertaining to deals to pay a lower tax to the government

2.Monopoly:Private firms with its immense power over government often try to manipulate the policy making process to destroy the competition.

3.Decrease in quality:Bribing can be used to promote a lower quality product at a higher price for example in government contacts essentially damaging infrastructures.

4.Foreign investment:Countries with higher corruption often sees lower foreign investment.This is because as corruption increases ease of investing becomes difficult thereby decreasing investment.

5.Inefficient allocation of resources often occurs due to companies winning them due to illegal tenders. This is accompanied by delays and overcharging with decrease in quality

6.Corruption disrupts the chance of lower income people to attain higher income due to uneven opportunities

7.Finally higher corruption is often accompanied by higher education and health cost which can be fatal to a growing economy.