What is the relationship between corruption in a country (i.e., bribe- taking by

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What is the relationship between corruption in a country (i.e., bribe- taking by government officials) and economic growth? Is corruption always bad?

Aug 17th, 2015

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Corruption always retards economic growth. In countries where corruption is prevalent, the economic growth of those countries is very low and majority of its citizens are poor. Corruption retards growth in that resources meant for development purposes end up being stolen by corrupt officials.

In cases where government tenders are issued through corrupt dealings, the contractors who end up winning the contracts are not necessarily qualified. This an unqualified contractors end up providing poor services and inferior goods. Therefore, the governments ends up paying high rates and receives inferior services and goods in return. Therefore, instead of developing, the country moves backwards.

Corruption also retards growth in that corrupt officials end up saving the money accumulated corruptly in foreign banks so as to avoid being caught. This retards growth in that, the flow of capital within a country is reduced and individuals and goverents end up seeking loans from foreign banks. This loans accrue high premiums. 


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Aug 17th, 2015

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