5) Reduced tax revenues
3) Reduced commitments from donor agencies
When corrupt politicians influence the approval of an investment project, the rate of return as calculated by cost benefit analysis ceases to be the criterion for project selection. 2) Reduced investment leads to reduced goods and services and inflation
Reduced investment leads to reduced goods and services, a concomitant reduction in gross domestic product and inflation. Because of corruption, maintenance and repairs always takes a back seat to new projects. High levels of corruption add to the risk of Ghana being marginalized in the international economy. Neither is it an intellectual effort to impress readers.
user = "newswires"; The focus of this paper will be the South East Asian Newly Industrialised Countries (NICs). By:
document.write(user + '@' + site + ''); Thus for example when a Ghanaian businessman goes to Tema Harbour to take delivery of goods, all the bribes that are paid may be tacked onto the final price they would charge consumers. // End --> Co-founders & Directors
Corruption can have a negative effect on foreign investment because for most foreign firms corruption is a cost of doing business to be recouped from revenues. This fear and uncertainty translates to reduced business growth and reduced gross domestic product. In extreme cases, the extortion of bribes from entrepreneurs can be seen as a tax which can reduce the incentive to invest. Pollution 4.Health deficiency and more. and features to Corruption is now recognized to be one of the world’s greatest challenges.
9) Corruption leads to uncertainty in economic transactions
but increasingly these agencies are now concerned that their aid fosters sustainable development and not end up in the pockets of corrupt government officials or finance unproductive public expenditure.
When entrepreneurs and businessmen are required to pay bribes before necessary permits are issued, they tend to view it as a cost of doing business and therefore pass that cost onto consumers (that is you and me) who suffer from high prices. In those instances where businesses refuse to pay “speed money” or grease the palms of bureaucrats, they are subjected to delays and frustration. 8) Poor maintenance of public infrastructure
The agencies are therefore focused increasingly on issues of good governance and in those cases of poor governance; some donors have scaled back their assistance. The aim of this article is to describe in very simple terms the evil effects of corruption on a nation such as Ghana. Injustice, 3. 6) Government’s inability to finance budget expenditures - Deficit Financing
The allocation of public procurement contracts through a corrupt system leads to inferior public infrastructure and services. The more corrupt a country is the lower its economic growth rate. Conclusion
Consequently, the selected projects are not selected on merit but because of cronyism and patronage. This is not an academic exercise along the lines of a college term paper or a PHD thesis.
B) Borrowings to meet the deficits leaves higher interest obligation for future generations
This essay seeks to establish the relationship between corruption and development. Consequently if … 10) Corruption reduces Investment and Economic Growth
All rights reserved. Injustice, 3. document.write(user + '@' + site + ''); site = "ghanaweb.com"; The prevalence of corruption arguably influences the economic environment through the creation of significantly higher levels of risks and uncertainty in economic transactions.
Whereas the above discussion is not exhaustive it is a powerful enough sample of the salient factors.
4) Reduced foreign direct investment
Here are 15 effects of corruption in our daily life.These effects include 1. Instead, our aim is to present a simple easy to understand exposition of how corruption can hamper the economic development of a nation.
Analysis further shows that if the corruption index improves by one standard deviation (equal to 2.38 in this case--a standard deviation measures variation from the "normal" index), the investment rate increases by more than 4 percentage points and the annual growth rate of per capita GDP increases by over a half percentage point. Copyright © 1994 - 2020 GhanaWeb. Corruption can have a negative effect on foreign investment because for most foreign firms corruption is a cost of doing business to be recouped from revenues. In effect, a country that improves its standing on the corruption index from, say, 6 to 8 (recall that 0 is most corrupt, 10 least), will enjoy the benefits of an increase of 4 percentage points of investment, with consequent improvement in employment and economic growth.
The centerpiece of Anas work was to show how the corruption was depriving the Ghana government of much needed tax revenue. Corruption & Fraud Audit Consortium, Ghana Ltd (CAFAC)
Our next article will examine the social impact of corruption.
Finally empirical research and regression analysis indicates that the amount of corruption is negatively linked to the level of investment and economic growth, that is to say, the more corruption, the less investment and the less economic growth. 7) Inferior public infrastructure
For fear of being exposed, corrupt officials prefer to approve new projects rather than spend to revamp the old corrupt projects they approved in the first place. Send your news stories to By affecting tax collection, corruption has adverse budgetary consequences.
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