A Note on Corruption and
Development
ECON 3510, Carleton University
June 12, 2014
A. Ritter
Source: Class Notes
The Problem of Corruption
1. Definition:
What is corruption?
The Problem of Corruption
1. Definition:
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Appropriation of public – or private –
resources for private profit or use
through the use of official power,
influence, or access.
Abuse of public – or private – trust,
position or access for private gain;
Transparency International’s Definition:
Corruption is the abuse of entrusted
power for private gain.
It hurts everyone who depends on the
integrity of people in a position of
authority.
Explanation of Corruption Perceptions Index
• A composite index, a combination of surveys and assessments
of corruption, collected by a variety of reputable institutions.
• Corruption: illegal activities, deliberately hidden.
Detected via scandals, investigations or prosecutions.
• No meaningful way to assess absolute levels of
corruption on the basis of hard empirical data.
– Bribes reported, the number of prosecutions brought or
court cases directly linked to corruption show how
effective prosecutors, the courts or the media are in
investigating and exposing corruption.
• Capturing perceptions of corruption of those in a
position to offer assessments of public sector
corruption is the most reliable method of comparing
relative corruption levels across countries.
2. Varieties of Corruption
2. Varieties of Corruption
 Theft of public property, goods or services;
 Illicit payments to suppliers or supporters
for political gain;
 Use of public property for personal
purposes;
 Influencing design or application of rules
and regulations and permissions for
personal gain
2. Varieties of Corruption, cont’d
 Twisting or influencing of public
policy for personal gain by bribery
 Discriminatory provision of public
services (to family, home town or
ethnic group or political supporters)
 Nepotism: hiring from family or
friends
3. Consequences of Corruption
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Unfairness;
Impact on income distribution
(Corruption as a regressive tax on the poor);
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Sacrifice or general well-being for personal
interests;
Parasitical impact on much economic activity;
Slow-down of investment;
Slow-down and deformation of economic
growth;
Deformation of public policy;
Impairs ability of government to function in all
areas due to erosion of “trust”.
Source: Private Sector Development Blog.
Corruption as a Regressive Tax: The Case of Ecuador
4. Solutions to Corruption?
4. Solutions to Corruption
 Make public expenditures and
procurement transparent
 Eliminate unnecessary regulations and
rules and make others simpler, more
transparent;
 Reduce immunity of members of the
executive, legislative and judicial branches
from prosecution for wrong-doing;
 Promote civil service professionalism with
 adequate pay scales;
 meritocratic promotion policies;
4. Solutions to Corruption? continued
 Free media for shining lights in dark
corners;
 Open Democracy, for scrutiny,
criticism and rejection of corrupt
leaders
 An independent judiciary;
 Separate financing of political parties
from general government
expenditures;
 Eternal vigilance