Corruption is a very actual problem in modern societies and many countries often do not know how to face such phenomenon. The main issue is that it involves mainly politicians, managers, bankers or, generally speaking, those people that are in possession of power. Many studies so far have suggested that those countries where corruption is stronger are the ones performing worst. Especially for what concerns emerging markets, those with a higher level of corruption have much more difficulty in prospering. A recent study from the World Bank had an astonishing outcome: the average income in countries with high corruption is about one third lower vis-à-vis countries with lower corruption; but also infant mortality is much higher and the literacy rate much lower in such countries. All these aspects drastically contribute to the general life conditions of their inhabitants. If we were to draw a map regarding corruption, we’d see that the most developed places in the world, such as North America and Europe, are characterised by a much lower level of corruption with respect to developing countries.
However, corruption can be intended under different shades and a deeper insight into the problem is needed.
The very first shade of corruption has to do with business, especially with contracts, deals and economic operations. Most of the times managers from either monopolies or oligopolies tend to bribe the highest exponents of the government so as to enjoy the advantages that can stem from such bribery. The main thing that a government could do is hindering the development of smaller industries from the same sector so that those already existing can set higher prices with no need of improving their products. Very high advantages can also derive from advantages on costs and transactions. In other words, the main aim of such bribery is to eliminate the threaten of the competition in order to have higher returns. However, in such a way the economy is not allowed to prosper freely.
As a direct consequence of the aforementioned issue, the overall wealth of the country is in the hand of those people who are already in possession of power and who cover a favourable position. Smaller entrepreneurs are discouraged to invest as they already know that they cannot face the competition and thus the gap between the lower and the upper class is much wider than in the absence of corruption. It is clear, then, that corrupted countries are characterised by a very small middle class and a huge difference (especially in terms of living standards and wealth) between the higher and lower classes of the society.
Another aspect of corruption regards the so called “shadow economy”, otherwise known as tax evasion. Such phenomenon, which is more common among small entrepreneurs, represents a cancer for all the economies, for it debars them of a great source of revenue. What’s more, those firms that do not declare their revenues often do not stick to the rules and provide their employees with lower wages and bad work conditions (something which has a further negative impact on the previous point quoted).
Moreover, corruption has impacts negatively both education and health care. Among the many reasons the fact that unqualified personnel is hired and the fact that inadequate medical and educational supplies are provided (especially for lower costs) are the ones standing out.
Taking into account the general picture, it comes natural that foreign investors are not attracted by the economy involved and the country is deprived of what’s considered by many analysts the main source of revenue for the economy.
Overall, all countries should strongly fight corruption, for in such conditions there is no way for development. The best way might be that of entrusting the problem to international organizations which cannot be affected themselves by the phenomenon; such solution has already been undertaken, at least partially, in some cases such as that of Greece.