...Corruption and its impact on Growth, Business and Government Effectiveness Ivo Dimovsky Managerial Economics – Empirical paper EMBA - American University of Bulgaria April 4th, 2012 ABSTRACT Corruption, like an infection, has co-existed with human society for a long time. Corruption has received significant attention among economists and international financial institutions during the last few decades, given its impact on economic growth both in developed and developing countries. There is an increasing volume of literature on the relationship between corruption and economic growth, and the general conclusion is that corruption slows down the long-term growth of an economy through a wide range of negative post-effects. It hampers economic growth, disproportionately burdens the poor and undermines the effectiveness of any investment and aid. Some theoretical studies suggest that corruption may counteract government failure and promote economic growth in the short run, however in recent years this studies aren`t anymore valid given the clear message from the negative effects on society and the economic system. In this paper we will analyze and present: First, we will describe and list a number of causes and consequences of corruption, derived from recent international studies from worldwide organizations trying to fight corruption. Second, we will introduce a regression model that can help explain the negative relationship between corruption (Corruption Perception Index...
Words: 4260 - Pages: 18
...World Map Index of perception of corruption * As with many developing nations, corruption is widespread in India. * India is ranked 72 out of a 179 countries in Transparency International's Corruption Perceptions Index, although its score has improved consistently from 2.7 in 2002 to 3.5 in 2008. * Corruption has taken the role of a persistent aspect of Indian politics and administration. Corruption In Politics * Criminalization of Indian politics is a main problem. * In July 2008 Washington Times reported that nearly a fourth of the 540 Indian Parliament members faced criminal charges, "including human trafficking, immigration rackets, embezzlement, rape and even murder". * At state level, things are often worse. The List of Scams in INDIA * A funny picture of how funds are going to divided among people. Corruption In administration * A 2009 survey of the leading economies of Asia, revealed Indian administration to be not just least efficient out of Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia, Taiwan, Vietnam, China, Philippines and Indonesia.. * Further it was also found that working with the India's civil servants was a "slow and painful" process. * Officials often steal state property like land, food (which is for poor) etc. * In Government Hospitals, corruption is associated with non availability of medicines (or duplicate medicines), getting admission and consultations with doctors Corruption In Judiciary ...
Words: 525 - Pages: 3
...Transparency International Corruption Perceptions Index 2012 TRANSPARENCY INTERNATIONAL the global coalition against corruption Contents Introduction About the index Corruption Perceptions Index 2012 1 2 4 Transparency International seeks to provide reliable quantitative diagnostic tools regarding levels of corruption, both at the global and local levels. The Corruption Perceptions Index is one of Transparency International’s indices sponsored by Ernst & Young. 176 countries, 176 scores. How does your country measure up? Transparency International is the global civil society organization leading the fight against corruption. Through more than 90 chapters worldwide and an international secretariat in Berlin, we raise awareness of the damaging effects of corruption and work with partners in government, business and civil society to develop and implement effective measures to tackle it. www.transparency.org Every effort has been made to verify the accuracy of the information contained in this report. All information was believed to be correct as of December 2012. Nevertheless, Transparency International cannot accept responsibility for the consequences of its use for other purposes or in other contexts. ©2012 Transparency International. All rights reserved. Transparency International Corruption Perceptions Index 2012 1 About the index Corruption can happen anywhere. When politicians put their own interests above those of the public. When officials demand...
Words: 2294 - Pages: 10
...Akhil Kaushal P According to The Transparency International 2006 Corruption Perceptions Index: • Most honest countries – Finland, New Zealand, Iceland, Denmark and Singapore • Most corrupt countries – Haiti, Guinea, Myanmar, Iraq, Bangladesh, Chad, Congo and Sudan • China, Brazil, Ghana, Senegal, Peru, Mexico, Saudi Arabia, India and Egypt all rank in the middle Lack of resources Explosive population growth Need stronger and more effective institutions Lack of democracy Ineffective judiciary Unfair elections Lack of free media From The Bulging Pocket and the Rule of Law: Corruption, Inequality, and Trust Inequality –> Low generalized trust & High in-group trust –> Corruption –> Inequality The dilemma of low trust in strangers and high trust only in your own group Inequality and in-group trust lead to clientelism This pattern is difficult to break Two types of inequality: Economic inequality Unfair legal system Makes it more difficult for the poor to have access to the legal system Shielding people at the top Democratic institutions are not sufficient to curb corruption Media consumption, centralization, federalism, the nature of the electoral system, the level of wages paid to officials also don't matter Structural reforms may not matter much for corruption, however: • Democratic countries are far less corrupt than nondemocracies • Countries with strong democratic...
Words: 334 - Pages: 2
...and supply relations, and investigation of the competitiveness of incumbent companies. (True or False) 2. Transparency International’s Corruption Perceptions Index (CPI) pertains to the corruption in a country or the demand side of corruption. (True or False) 3. To use a country to export goods to better developed countries and markets requires foreign markets to be closed, which if generally the case in developing countries. (True or False) 4. Culture can be important, not only shaping the opportunities and risks in a country but also for the likelihood that a company can implement its market strategy. (True or False) 5. Microfinance, in its modern version, was introduced by Muhammad Yunus, a Bangladeshi economist. (True or False) 6. The fair trade system attempts to intervene directly on both market and nonmarket issues by coordinating the flow of consumer revenue to participating producers. (True or False) 7. Rule of law can override politics and political ties when doing business in emerging market countries. (True or False) 8. Emerging markets countries have imposed a variety of restrictions on foreign direct investment, foreign exchange transactions, and the repatriation of earnings. (True or False) 9. Media restrictions, ethnic and religious conflicts, political corruption, and political megalomania are some of the risks faced in emerging market countries. (True or False) 10. Emerging market countries face...
Words: 692 - Pages: 3
...Page 1 of 8 Orica – The Russian Puzzle ------------------------------------------------------------------------------------------------------------------------------------- Orica Limited is a leading publicly-owned company with operations in more than 50 countries and is ranked among the top 40 companies listed on the Australian Stock Exchange. Orica and its growth Orica was formed when British chemical company ICI plc divested its Australian operations in 1997. Since then, Orica has pursued opportunities for organic growth, category expansion, mergers and acquisitions (including the acquisition of the global explosives interests of ICI Plc) that have marked Orica’s transformation into a global company. Orica today pursues a focused strategy targeted at the provision of services to mining, construction and infrastructure industries. It operations are conducted as three separate businesses - Orica Mining Services (OMS), Minova, and Orica Chemicals, each a leader in its chosen market. Orica Mining Services (OMS) is the global market leader in the supply and servicing of commercial explosives and blasting systems to the mining, quarrying and infrastructure sectors. Commercial explosives, initiating systems and Blast-Based Services are its main offerings. The business is run globally with a presence in Australia, Asia, Europe, the former Soviet Union, Africa, the Middle East, North America and Latin America. Mining services contributed to 55% of the 2010 revenues. OMS business...
Words: 1803 - Pages: 8
...Methodology: As noted above, the highest (and best) level of transparency with the least perceived corruption is indicated by the number, 1. The lower (and worse) levels of transparency are indicated by higher numbers -- 100 and above. According to Transparency International, the Corruption Perceptions Index (CPI) table shows a country's ranking and score, the number of surveys used to determine the score, and the confidence range of the scoring. The rank shows how one country compares to others included in the index. The CPI score indicates the perceived level of public-sector corruption in a country/territory. The CPI is based on 13 independent surveys. However, not all surveys include all countries. The surveys used column indicates how many surveys were relied upon to determine the score for that country. The confidence range indicates the reliability of the CPI scores and tells us that allowing for a margin of error, we can be 90% confident that the true score for this country lies within this range. Note: Kosovo, which separated from the Yugoslav successor state of Serbia, is not listed above. No calculation is available for Kosovo at this time, however, a future corruption index by Transparency International may include the world's newest country in its tally. Taiwan has been listed above despite its contested status; while Taiwan claims sovereign status, China claims ultimate jurisdiction over Taiwan. Hong Kong, which is also under the rubric of...
Words: 423 - Pages: 2
...APPLICATION OF CAGE DISTANCE FRAMEWORK - AN ANALYSIS OF KENYA AND RUSSIA SUBMITTED BY: YULIA BEREZINA SUBMITTED TO PROF. DANIELE CERRATO MATHIAS KOSKE DAVIDE NICHETTI VANESSA ZERRATE 11TH FEB. 2015 1 Foreign investment can be particularly challenging. In order get it right, the use of tools and evaluations is critical. In this document, based on the CAGE framework, we analyze distances between Russia and Kenya, and assess how they impact business establishment and operations in the latter. One of the most important things to take into account is the culture. We noticed that the two countries have very distinct and diverse cultural dimensions. They do not have a common language i.e. Russia has Russian as it official language while Kenya has English and Swahili, or have any shared ethnicity despite Russia having 185 and Kenya 42 ethnic groups. Religious disparities are also evident in these two economies. The Russians are largely unbelievers with the Russian Orthodox being the dominant religion whereas Kenyans are largely Christians. Despite these differences, the Muslim population in both countries is significantly represented but their marginalization makes them insignificant on an investment front. Finally, the social norms and values in both countries are quite similar, with the similar concepts of family, societal upbringing and gender roles. When evaluating both countries at the administrative level we encounter that they do not share a...
Words: 1044 - Pages: 5
...o Communicable disease • Increasing interest rates • Transparency International’s Corruption Perceptions Index: 137/158 • Unemployment: 10% • Natural disasters: Tsunamis, earthquakes, etc cripple economy and brought maximum population under poverty overnight. • Energy shortage. Not able to utilize natural resources for geothermal energy. • Poor implementation of economic reforms. • Technological readiness: 75/148 • Inefficient government bureaucracy. • Launching Business o 4 days o 4 procedures Malaysia • GCI Rank: 24/148 • Transition stage between efficiency driven and innovation driven. • Shortage of skilled labour o Low level of women workforce. (ranked 131/148) o Lack of developed educational sector, • Budget Deficit. • Lack of IP rights and laws. • Low Technology readiness in comparison with other SE Asian countries (Ranked 51/148). • Inefficient government bureaucracy. • Corruption • Poor work ethics in national labour force. • Insufficient capacity to innovate. The Philippines • GCI Rank: 59/148 • Doing Business Rank: 138 • High rate of crime • Transition from factor driven to efficiency driven • Rigidities o Job creation – structural problem o Shifting labour from agriculture to industries • Aging & Inadequate supply of infrastructure • Currency instability and volatility • High level of government debt • Rapid population growth • Endemic corruption (Rank 87/148) • Inefficient judiciary system • Rising energy costs • Prone to natural...
Words: 487 - Pages: 2
...different from what you are used to in Canada. One of the major differences is that Brazil is a collectivistic culture as measured on Hofstede’s Individualism Index, in contrast to Canada’s individualistic culture (Hofstede, 2014). Brazil’s collectivist nature will have many impacts on your daily interactions, including the Brazilian importance of family, which will often be place above work priorities (Training, 2012). Brazil is also different in its communication style, which tends to be more informal and indirect than Canada’s formal and direct style. Brazil is also considered a high-context culture, therefore it is important to pay attention to what is said, how it is said, and what is not said (Suderman, 2008). Another major aspect of Brazilian culture is the importance of building relationships before commencing business. Brazilians expect to get to know their business contacts through multiple meetings, in order to establish trust, and hopefully a friendship (DiPaolo, 2006). This process may take some time as it illustrates Brazil’s Polychronic orientation, which is more relaxed (slower) in nature and where the prevailing attitude is that “things will get done in their own time” (Suderman, 2008). Brazil is also very comfortable with inequality as evidenced by their high score on Hofstede’s Power Distance Index (Hofstede, 2014). As a manager in Brazil you will be expected to take absolute responsibility and to use an authoritarian style of leadership (Training, 2012)...
Words: 2632 - Pages: 11
...of 2000 helped the country to experience economic growth. Today Serbia is preparing for membership in the European Union so it keeps making reforms, including reforms directed on creating positive environment for doing business. Key factors that are taken into consideration are business environment, economic structure, economic growth and labor market. Business Environment. First of all, attention should be payed to the index of economic freedom, corruption and index of fiscal freedom. * Index of economic freedom. Currently it’s meaning is 59.4. This figure is lower than in other Balkan countries and the EU. However, in recent years there is a tendency to positive change (increase of 2.8% over the past 5 years); * One of the problematic issues is corruption. Index of corruption peception is quite high and is 42 points, it is the average rate in the Balkan countries, but relatively high in comparison with other European countries. This may indicate the need for searching for relations, lobby and high costs of corruption and bribery; * Index of fiscal freedom also has a negative tendency, it is 83.1. This indicator can have a negative impact on business activities because the company is spending heavily on taxes. Tariff rate is the highest in the region and is characterized by a rate of 6.5%. Income Tax Rate - 15%, Corporate Tax Rate -...
Words: 1038 - Pages: 5
...International Corporate Finance 11th Edition by Jeff Madura 1 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16 Analysis of Country Risk Chapter Objectives Identify the common factors used by MNCs to measure country risk Explain how to measure country risk Explain how MNCs use the assessment of country risk when making financial decisions Explain how MNCs can prevent host government takeovers 2 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. What is Country Risk Analysis Country risk is the potentially adverse impact of a country’s environment on an MNC’s cash flows. An MNC conducts country risk analysis when it applies capital budgeting to determine whether to implement a new project in a particular country or to continue conducting business in a particular country. 3 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Country Risk Characteristics...
Words: 2513 - Pages: 11
...The Corruption Perceptions Index (CPI) is the indicator to reflect the level of corruption among countries or territories. The ranks and scores are widely used to evaluate the abuse of the public power. The index is measured by numerous institutions from a variety of assessment and surveys of corruption. The scale of scores is from 0 to 100, to be specific, 0 means a country has a high level of corruption and 100 means a country is very clean. Both Australia and Chile have a steady ranking between 2010 and 2012. In 2012, Australia scores 85 and ranks 7th; Chile scores 72 and ranks 20th. The two countries both have a higher CPI; however, the CPI of Australia is higher than that of Chile obviously. There are some reasons related to the different ranking. The Australian government provides essential and adequate training to officers and officials about the severe consequences of corruption, which is an effective measure to prevent corruption. In addition, Australia established Corruption and Crime Commission (CCC) which is the leading anti-corruption body in Australia. CCC supervises public sector agencies and officials to comply rules and laws, thus avoid corruption. Chile has a better reputation of transparency and higher CPI than any other countries in Latin America. This because Chilean government attempts to improve anti-corruption and transparency. In 2009, Chilean transparency law goes into effect, and it requires all public sectors to publish information on incomes and...
Words: 486 - Pages: 2
...because consumers face different prices in various countries. One thousand U.S. dollars can buy much more in Mexico compared to the U.S. since prices in Mexico are lower. To account for the differences in prices, one should look at the GDP per capita in Purchasing Power Parity terms. In that way, one compares countries in term of real income (what can be purchased) as opposed to the dollar income. Compare countries: level of development. The most basic comparison is between GDP per capita levels or the levels of GDP per capita in terms of Purchasing Power Parity. However, GDP can be a misleading measure as it may not capture other aspects of the quality of life such as crime, education, environmental quality, etc. The Human Development Index published by the UN is a composite measure that accounts for a broader set of development factors. Compare countries: economic structure. One should look at the shares of Agriculture, Industry, and Services in the overall value added of the economy. Generally, lower income countries have a larger share of agriculture and the share of services expands as they develop. Compare countries: unemployment. The unemployment rate is the standard variable used to compare countries. However, one may want...
Words: 750 - Pages: 3
...Compliance in INDIA Kaiser Ahmed, Marlies Herzog OVERVIEW • • • • • • • • • Ahmed, Herzog General country data Corporate governance in India Corruption Jurisdiction & regulation Profit & investment repatriation Stock exchanges Setting up a business Employee compliance Points worth noting 06.11.2012 General Country Data • http://www.youtube.com/watch?v=oSGcTDCK Jx8 (Fresh up!) • 5.8% growth rate per year • World‟s 10th highest Nominal GDP • World‟s 3rd largest economy in terms of PPP Problems: Poverty, illiteracy, corruption, malnutrition, inadequate health support Ahmed, Herzog 06.11.2012 Cont‘d • 1991 „Liberalization of Economy’ • WTO member since 1995 • 10th largest importer & 9th largest exporter • 2nd largest workforce: 487.6 mio • Hourly wage rate has doubled since 1999 DOTCOM era • By 2030 middle class will reach 580 mio Ahmed, Herzog 06.11.2012 Critical success factors • Global Competiveness Index: 51st • 39th best innovation nation • 7 out of the top 15 IT companies are represented • 2.8 million of IT professionals which contributes US$100 billion to India‟s GDP (7,5 %) Contradiction Ahmed, Herzog 06.11.2012 Points worth noting • High % of young population (< 35 yrs) • Rapidly growing working age population • Rising level of general education & literacy • Infrastructure & transport investments • Removal of labor regulations Ahmed, Herzog 06.11.2012 Corporate governance in India • Clause 49, Birla Committee: board...
Words: 1046 - Pages: 5
