The cost of corruption in developing countries

Corruption is estimated to increase the cost of achieving the UN Millennium Development Goal on water and sanitation by US $48 billion   Source: Transparency International, MDG Report 2010

 

CORRUPTION HITS THE POOR HARDEST

Poor families in Mexico spend an estimated one-fifth of their income on petty bribes: Bribery in public services cost the economy 32 billion pesos (US$ 2.6 billion) in 2010.
Source: TI Mexico, Communicado de Prensa (2011)
In Bangladesh, 84% of the households of Bangladesh who had interacted with one or more of different public and private service sectors or institutions have been victims of corruption in 2010. 33% of these people experienced corruption in healthcare services.
Source: TI Bangladesh, ‘Corruption in the Services Sectors: National Household Survey 2010’ (December 2010) 
Findings from a seven-country study in Africa — Ghana, Madagascar, Morocco, Niger, Senegal, Sierra Leone and Uganda — showed that 44 per cent of the parents surveyed had paid illegal fees for schools that were legally free for their children.
Source: Transparency International: Africa Education Watch 

AID AND BUDGET MISUSE

Due to corruption in Indonesia, it is estimated that nearly one-fifth of the rice distributed for an anti-povertyprogramme disappeared.
Source: Journal of Public Economics, ‘Corruption and the costs of redistribution: Micro evidence from Indonesia’, 90 (4-5) p. 853 – 870.
87 per cent of funds allocated for non-wage school costs in Uganda never reach the intended schools
Source: World Bank
In South Africa, 27 per cent of principals never receive their budgets on time. In Cameroon half of state primary schools have problems with their buildings: only 19 per cent of schools have working toilets, and barely 30 per cent have enough tables and benches for student
Source: Transparency International: TISDA 

FOREIGN INVESTMENT DISCOURAGED

Countries that score badly on the World Bank’s Doing Business Indicators also score badly on the Corruption Perceptions Index, including Chad, Burundi and the Democratic Republic of Congo, all ranking in the bottom 15 countries on both tables.  This suggests that highly corrupt countries also have difficulty attracting business.
Source: Inferred from comparing Doing Business Index, World Bank Group, (2010), against Corruption Perceptions Index, TI (2010)
Based on a survey of 214 executives, 28 per cent opted not to do business in a country due to bribery and corruption issues.
Source: KPMG, ‘Global Anti-Bribery and Corruption Survey 2011’
In a survey of more than 350 businesses worldwide, 35% of companies had been deterred from an otherwise attractive investment because of the host country’s reputation for corruption.
Source: Control Risks, Facing up to Corruption: A practical business guide, (2007)

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5 Responses to The cost of corruption in developing countries

  1. Dagny says:

    Your blog raised a question in my mind. I would appreciate an answer.

    In the third world, is corruption the cause and poverty the effect, or is it the other way round?

    A tad simplistic perhaps, but I like reducing issues to simpler forms.

    Dagny

  2. procentus says:

    An interesting question. In my view corruption and poverty certainly have some linkage in developing countries, but the link is not a simple cause and effect correlation. It is a complex relationship and involves a mix of political, economic educational and social corruption which leads to the maintenance of a skewed distribution of wealth and opportunity. A society where corruption is the norm is not a sustainable one and will inevitably lead to economic decline, political, and in some cases, violent conflict. Poverty in itself does not cause corruption. There are many people in poverty who are examples of fine upstanding people of great character. Corruption is prevalent in both the wealthy, the privileged and the poor. Corruption is perpetuated by individual greed and a perverse culture, not poverty.

    There are many apparently economically successful countries right now who are heading for real problems ahead if their culture of corruption is not dealt with in the near future.

  3. thanks for taking a time to help people with so great information, congratulations, your work is so dignifying. lista de email lista de email lista de email lista de email lista de email

  4. I agree. History has shown what corrupt leaders have done to the livelihood of their countries and subjected their people to dire poverty levels. The world community needs to be aware of this as some of these leaders have been supported by major powers. This only allows the corrupt leaders to lavish in their riches while the people suffer.

  5. ipshita says:

    @Dagny In third world country corruption and poverty are byproducts of politics nothing else as rightly pointed by procentus. Politics corrupts the system and ensures that it remains corrupt and in order to stay in power and sustain themselves they need poverty and illiteracy. Sad but true.

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