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Social and Economical effects of Government Corruption

The effect of Corruption has many dimensions related to political, economic, social and environmental effects.  In political sphere, corruption impedes democracy and the rule of law. In a democratic system, public institutions and offices may lose their legitimacy when they misuse their power for private interest. Corruption may also result in negative consequences such as encoring cynicism and reducing interest of political participation , political instability , reducing political competition, reducing the transparency of political decision making, distorting political development and sustaining political activity based on patronage, clienteles and money, etc. In Social sphere, corruption discourages people to work together for the common good. Frustration and general apathy among the public result in a weak civil society. Demanding and paying bribes becomes the tradition. It also results in social inequality and widened gap between the rich and poor, civil strive, increased poverty and lack of basic needs like food, water and drugs, jealousy and hatred and insecurity. Government Corruption is a global phenomenon found in all countries – but

evidence shows it harms poor people more than others, stifles economic growth and diverts desperately needed funds from education, healthcare and other public services. An estimated one trillion US dollars get siphoned off through bribes every year according to the World Bank.

Residents of states with more Government Corruption may not only lose trust in political officials, but also have less trust in the general public, according to a new study by Sean Richey, an assistant professor of political science at Georgia State University. Richey studied arrests of government officials in 50 states combined with 2002 through 2004 survey data of the American National Election Studies panel, which produces data on voting, public opinion and political participation.”Stories of political corruption are constantly in the media, and this research reveals that Governmental Corruption has large corrosive effects on civil society,” Richey said. “I find that increases in corruption in the period before the survey was taken leads to decreases in belief that Government officials and ordinary citizens are trustworthy. It was the first empirical test of this concept.” The findings show that people living in a state with more convictions for felony corruption from the previous two year period had a negative effect on generalized trust. The study also shows that people in the middle-aged generation and people who volunteer are associated with an increase in trust, while having conservative ideology and media usage correlate with decreased levels of trust.

COST OF Government CORRUPTION 

Various micro-studies reviewed by the authors unmistakably suggest that the efficiency costs of corruption could be quite severe, as corruption may jack up the marginal tax rate of firms, decrease business activity, raise the marginal costs of public funds and render certain government projects economically unviable.

An interesting estimate of the efficiency costs due to distortion is the allocation of capital from state banks, the authors point out, citing a study that politically connected firms, defined as those with a politician on their boards, received 45-per-cent larger loans from government banks in spite of having a 50-per-cent higher default rates on these loans.

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