The Impact Of Economic Inequality And Public Sector Corruption On Human Development

Thesis (M.A.) from the year 2015 in the subject Economics - Case Scenarios, University of Westminster, course: International Economic Policy and Analysis, language: English, abstract: As a society we are always interested in knowing how much progress we have made over time. In the past, economists, analysts and policy-makers mainly referred to changes in the level of gross domestic product to reflect how the population of a particular country has progressed during a given period of time. Indeed, the average material standard of the population is an essential tool in assessing how much progress a society has made. However, various global, regional and local reports on human development have demonstrated that economic growth alone is far from sufficient as the sole condition for progressing in human development. Therefore, accurately measuring human development requires a frame that includes different key economic and social indices. Therefore, we need to think about a series of narrow and broad indicators such as per capita income but also life expectancy, education, and the extent of poverty. Based on this idea, there are different approaches that have become prominent in trying to explain what progress actually means to a society and how to measure the actual state of human development in a nation (Gallardo, 2009). However, this dissertation is based on the results presented by the Human Development Index known to be one of the most valuable concepts in attempting to capture the state of human development in a country. According to its latest values, Turkey scores far above Brazil in the Human Development Index 2013 (United Nations Development Programme, 2014); although the World Bank indicates that Brazil has a higher level of per capita income than in Turkey (The World Bank, 2014). This paper supports the hypothesis that, in particular, the issues of economic inequality and public sector corruption have a significant impact on human development related indices. Therefore, by critically analysing and comparing relevant statistics of two comparable economies – Turkey and Brazil – this paper intends to provide a valuable explanation regarding the question: how can a country with lower levels of per capita income achieve higher human development outcomes?

This paper demonstrates that high and rising corruption increases income inequality and poverty by reducing economic growth, the progressivity of the tax system, the level and effectiveness of social spending, and the formation of human capital, and by perpetuating an unequal distribution of asset ownership and unequal access to education. These findings hold for countries with different growth experiences, at different stages of development, and using various indices of corruption. An important implication of these results is that policies that reduce corruption will also lower income inequality and poverty.

Seminar paper from the year 2010 in the subject Business economics - Miscellaneous, grade: 1,0, Berlin School of Economics (Global Governance), language: English, abstract: During the last decades, corruption became an important topic. About twenty years ago the issue started to gain increasing attention. Different Organization engage in the fight against corruption. This is a remarkable change compared to the situation before the 1990s. Back then, most people did not see it as a pressing problem. Actually, it was more seen as an integral part of doing business. Most European countries allowed for tax deductibility of bribes. Even the World Bank, not constricted by such national concerns, was avoiding the topic. The changed perception of corruption has manifold reasons. Foremost, the geopolitical situation changed remarkably. During the cold war, governments, despite their corruptness, were supported to make sure they were not joining the communist bloc. After the end of this ideological competition, the imperative to tolerate and not to address issues like corruption and abuse of political power ceased to exist. Last, but not less important, the USA, not constraint by geopolitical considerations, had economic interest to put the topic on the agenda. While for US-companies bribing abroad was forbidden, most other developed countries used graft to initiate business abroad. Therefore, the US had a special interest to push for anti-corruption laws to level the playing field for its companies. From a western normative and moral point of view this fight against corruption on the international level seems to be a desirable development. However, if those were the only reasons for this crusade, it could be misperceived as another example of the imposition of rules from the Global North on the Global South. Then again, if corruption has negative impacts, other than moral concerns, it would legitimize this movement. Prevailing corruption might influence the development and economic performance of a country. In today`s perception development and economic performance includes a variety of indicators, which improve people`s quality of life. Therefore, after having narrowed the definition of corruption as it is understood within this paper, the correlation between corruption and some of those indicators will be examined. After this basic assessment, the relationship between economic growth, as one of the indicators for development, and corruption shall be illuminated closer. The question, whether there is a causal relationship and what the channels of this connection are shall be explored.

This book focuses on and analyses the multi-layered, multi-faceted, complex and complicated corruption phenomenon that undermines inter alia democracy, government, governance, development, rule of law, and accountability; how it harms a country’s reputation, deters trade and investment; distorts markets and the performance of economies and has negative effects on the environment for the present and the future generation while detailing the profound consequences for society, especially the poor and marginalised, by violating trust, human rights and increasing inequality. Corruption and poverty have become endemic evils in Africa and there is no blueprint solution for them, given the varying situations and conditions across the continent. This book proposes a holistic, all-inclusive, and multi-thronged approach to the corruption and poverty epidemic targeting Africa. This collection of chapters will be of interest to students and academics alike.

This book examines the complex relationship between corruption and entrepreneurship in countries of varying levels of economic development. The authors explore the ways in which social welfare policies have changed in current economic and political environments as well as key challenges faced by the welfare policies. In addition, this book addresses three key questions with regard to the impact of corruption on institutions and social welfare: • Is corruption an additional burden in extensive regulatory environment on different types of entrepreneurship---necessity entrepreneurship, opportunity entrepreneurship, total entrepreneurial activity, self-employment, and newly registered firms? • Is corruption helpful for entrepreneurs who have aspiration to operate outside their home country border in highly regulated environment? • How does corruption affect income distribution generated through entrepreneurial activity? Entrepreneurship is an important factor for local and national economies as it generates employment and income that are crucial for economic development. Corruption can significantly influence the nature of decisions made by entrepreneurs, with profound effects on business creation, institutional development, and economic performance. For example, an entrepreneur with resources and networks might be able to influence the regulatory agencies to overlook violations, expedite permits, or bribe corrupt program administrators to violate the rules of distribution, exacerbating income inequality and obstructing economic growth and development. While corruption is not a new phenomenon, the current globalized economy has introduced trade into the corruption question as globalization puts pressure on countries to open borders to attract investments and gain a competitive advantage. However, many country level institutions do not always change as fast as the economic activity across borders, which can encourage corruption in order to bypass inefficient regulations and to successfully engage in entrepreneurship. The authors of the book examine this phenomenon. Featuring policy implications and case studies, this book will appeal to graduate students, academics, professionals, practitioners, and researchers in entrepreneurship, international business and public policy.

Everyday the community is being stunned as reports of irregular partices compete for press headlines. The impression is that bribary and corruption, is one form or another in both extensive and increasing; although systematic statistics in this area are rare for obvious reasons. What is corruption? This list of possibilities is extensive. It starts with the outright bribary of government officials and the more ambiguous question of political contributions; then there are a whole range of activities that could be considered to some degree corrupt covering such things as the misuse of company assets for political favours, kickbacks and production money for the police, payola to disc jockeys, sympathetic features articles in return for advertising revenue, free revenue, free junkets for MP s and journalists, secret, price-fixing agreement, obtaining parts in films for reasons not wholly related to acting ability, insider dealing of various kinds, as well as improper use of the old boy network. All these forms of behaviour have one thing in common. They are attempts to influence the outcome of a decision where the nature of that influence is not made public. Essentially the practices are nothing more or less than the abuse of power. There are several reasons for this spread of corrupt practices. First the concentration of power in larger and larger units; particularly when combined with rapid growth where the channels of accountability are underdeveloped. It is also widespread in mature Societies where highly developed networks attempt to preserve the status-quo and further their vested interests.

This study is, to the authors knowledge, the fi rst empirical cross-country analysis of the relationship between corruption and human development (HD) in Africa. In most African countries the current state of HD is critically poor. In spite of two decades of democratization and substantial economic growth or stability corruption has become endemic and tends to adversely affect HD conditions and needs. Using a pooledcross- section-across time-design and a sample of 40 African countries over many years (2003 2007) and based on an OLS Analysis, this study attempts an empirical examination of the association between corruption and HD in Africa, while holding constant economic growth, government socioeconomic or welfare expenditures and political system and, controlling for some major internal and external economic variables. As found, corruption adversely affects human development in Africa. Overall, based on the main study model (Model 1) a unit increase in the corruption level (CPI) on a scale of 1 to 10 will cause a .48 percent decrease in the state of HD (HDI).The relationship between corruption and HD is however non-linear: using Model 3 which incorporate a square term of corruption, it was found that at and below 4.577 RCPI (i.e. 5.42 normal CPI) corruptions is likely to positively affect HD whereas at and above 4.577 RCPI corruption rather tends to adversely affect HD with an increasing return. Besides, it was also found, using Model 2 which incorporates an interaction term of corruption and political system, that democratization has deceived scientists theoretical projections and peoples political expectations of the 1990s. Democracy has not improved HD in Africa. Both non-and partly democratic (i.e., authoritarian) and democratic political systems adversely affect HD. The adverse impact of corruption on HD is even worse in the latter systems. After checking for the main effect (Model 2) it appears that, as corruption increases by one unit, HD decreases by 9.48 percent in African countries with authoritarian systems. In contrast , the same one unit increase in corruption will have an additional 5.23 percent decrease in the HD of African countries with a democratic system. This study brings new insights about public policies ineffectiveness and failures to satisfy increasing HD needs in Africa. It throws new lights on the relationship existing between economic growth, democracy and corruption and HD. It suggests some policy reforms which could improve the state of HD in Africa. Overall, it is an important contribution to the theoretical and empirical body of administrative theory and knowledge.

In global development, corruption entangles many societies, most observably in the vulnerable fabric of developing nations. Examining Corruption and the Sustainable Development Goals unravels the layers of this persistent challenge, meticulously examining its pervasive influence on pursuing the United Nations Sustainable Development Goals (SDGs). This book ventures into the heart of corruption's impacts, spanning economic, social, political, and environmental dimensions. Corruption, manifesting in insidious forms such as bribery, embezzlement, and nepotism, casts a daunting shadow over the integrity of public institutions, eroding public trust crucial for sustainable development initiatives. This book explores case studies, robust theoretical frameworks, and insightful policy perspectives. It is tailored for an audience within the academic research community, scholars, researchers, policymakers, and development practitioners thirsty for an understanding of the complex interplay between corruption and sustainable development in the developing world.

Governance matters for social welfare. Better governed countries are richer, happier and have fewer social and environmental problems. Good governance implies that public sector agents act impartially. It manifests itself in the form of equality before the law, an independent and professional public administration and the control of corruption. This book considers how economic inequality – both interpersonal and interethnic – can affect the quality of governance. To this end, it brings together insights from three different perspectives. First, a long-run historical one that exploits anthropological data on pre-industrial societies. Second, based on experimental work conducted by social psychologists and behavioural economists. Third, through cross-country empirical analysis drawn from a large sample of contemporary societies. The long-run perspective relates the inequality-governance relationship to societal responses in the face of uncertainty – responses that persist today in the guise of cultural traits that vary across countries. The experimental evidence deepens our understanding of human behaviour in unequal settings and in different governance contexts. Together, the long-run perspective and the experimental evidence help inform the cross-country analysis of the impact of economic inequality on governance. This analysis suggests the importance of both economic inequality and culture for the quality of governance and yields several policy implications.

High-quality data on state-level inequality and incomes, panel data on corruption convictions, and careful attention to the consequences of including or excluding fixed effects in the panel specification allow us to estimate the impact of income considerations on the decision to undertake corrupt acts. Following efficiency wage arguments, for a given institutional environment the corruptible employee's or official's decision to engage in corruption is affected by relative wages and expected tenure in the public sector, the probability of detection, the cost of fines and jail terms, and the degree of inequality, which indicate diminished prospects facing those convicted of corruption. In US states over 25 years we show that inequality and higher government relative wages significantly and robustly produce less corruption. This reverses other findings of a positive association between inequality and corruption, which we show arises from long-run joint causation by unobserved factors. -- corruption ; rent seeking ; inequality ; Gini coefficient ; efficiency wage ; public sector wages