Why corruption is responsible for slow economic growth
Corruption around the world is believed to be endemic and pervasive and a significant contributor to slow economic growth, to stifle investment, to inhibit the provision of public services and to increase inequality to such an extent that international organizations like the World Bank have identified corruption as ‘the single greatest obstacle to economic and social development’ (World Bank, 2001). More recently, the World Bank has estimated that more than US$ 1 trillion is paid in bribes each year and that countries that tackle corruption, improve governance and the rule of law could increase per capita incomes by a staggering 400 percent (World Bank, 2004). Commensurate with the place of corruption on the policy agenda, the economics literature has paid increased attention to the issue of corruption. Though the recent literature is mainly theoretical in focus, there have also been attempts – albeit relatively few in number – to address the causes and consequences of corruption from an empirical standpoint. Notable efforts in this area include, among others, Mauro (1995; 1998) on the impact of corruption on economic growth and investment and composition of government expenditure, Treisman (2000) on the causes of corruption and Fisman and Gatti (2002) on the links between political structure and corruption.
In reviewing the literature of corruption, the dissertation will attempt to highlight the various definitions, forms, theories and historical context and empirical works on corruption.
2.2. Defining Corruption:
Corruption as a word is derived from the Latin word ‘corruptus’ meaning to break. The use of the word emphasizes the destructive effect of corruption on the fabric of society and the situations where agents and public officers break the confidence entrusted in them (Nicholls, C., Daniel, T.,