Assess The Effects That Corruption May Have On Economic Development. How Do You Reconcile The Anecdotal Evidence With Theoretical Ideas?

631 words - 3 pages

Assess the effects that corruption may have on economic development. How do you reconcile the anecdotal evidence with theoretical ideas? Introduction The World Bank defines corruption as: “abuse of public office for private gains”1. Corruption is seen to be an integral part of human society and demonstrates itself through a variety of ways – bribing politicians, using kickbacks or tipping a waiter in a restaurant to get a better table are all examples of corruption. Corruption is generally seen as an important factor that hinders the economic development of an economy. Overwhelming amount of literature, through presenting empirical and anecdotal evidence, argues that corruption reduces the ...view middle of the document...

Corruption can be seen as good in various ways, according to these authors. Leff’s (1964) general idea is that “corruption facilitates beneficial trades that would otherwise not have taken place. In doing so, it promotes efficiency by allowing individuals in the private sector to correct or circumvent pre-existing government failures of various sorts”. This becomes possible through emergence of “speed money”, which reduces the delay in moving files, getting documents, licenses etc. Levy (2007) supports these ideas by providing anecdotal evidence based on his experience coming from post-soviet Georgia. He argues that “corruption allowed the Georgian economy to produce far more output and to allocate what was produced far more efficiently than would otherwise have been feasible”. This evidence at the same time supports my thesis. Georgia, is a developing country. It was able to benefit from corruption in the short term – in the period between the end of 1980s and the beginning of the President Saakashvili’s economic reforms in 2003. The World Bank paper on the success of Georgian reforms (2012) presents evidence how Georgian government has been successfully fighting corruption in public services,...

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