The impacts of corruption are observed worldwide in developed, developing, or underdeveloped countries. Hence, its existence in governments’ public and private institutions cannot be ignored. In light of this, significant political and economic forums have been characterized by discussions premised on corruption, its nature, causes, and possible solutions. Corruption is characteristically the misuse of public office or position, status, and rank for the personal gain. Corruption can be in the form of fraud, bribery, embezzlement, extortion, cronyism, nepotism, influence peddling, and misallocation of public property and assets for personal use. The execution of corruption can be an act of one or more people.
The concept of monopolizing profit is among the prevalent forms of corruption, which has sparked significant debates in various forums. Economic rent is present when an individual is uniquely placed to provide a service or a commodity, which is not readily available (Sampford, Shacklock, Connors, & Galtung, 2006). Therefore, the item or service in their possession has unique attributes such as value or scarcity, for instance, this could be a piece of land in a city’s central business district, access to natural resources such as oil or a personal trait, which is invaluable to others. The individual in possession of such a unique item or service can potentially quote its price above the normal market value and price of the item; as such, the individual gains monopoly profit.
The execution of business and economic transactions requires adherence to predefined rules of transactional engagement. These rules are premised on ensuring that business and economic transactions are conducted in a predefined protocol aimed at preserving transparency and consistency. Therefore, regulations and rules in transactional engagements aim at creating and maintaining a fair and transparent environment in order to avoid conflicts, which can be disastrous. Additionally, this function is aimed at controlling and keeping in check human instincts such as greed and other unsavoury instincts, which can be disastrous (Rose-Ackerman, 2006).
This facilitates the minimization of consequences that can be potentially damaging to the society. Rules are critical in ensuring that parties and referees of a business or economic transaction conform to defined acceptable standards of behaviour and moral conduct. Therefore, in order for rules to be followed, they have to be transparent and consistent; as such they should be clearly set and communicated to all involved parties in advance. This ensures that rules are understood to avoid disagreements and misunderstanding. Significantly, rules should be applicable to all parties equitably and in a consistent manner to avoid arbitrary alterations, which might be exploited to commit corruption.
Discretionary powers characterize a critical concept in the evaluation of corruption. These arise since it is practically impossible to create rules or regulations that are comprehensively fool proof and impermeable, so that they are capable of countering all possible contingencies that can emerge in trying to direct or control economic activities. Therefore, a degree of discretion and flexibility is given to administrators in the implementation and interpretation of rules (Rose-Ackerman, 2006). As such, discretionary power is potentially abused through misinterpretation and poor implementation of rules with the purposes of exploiting the outcome of an economic activity for personal gain. In light of this, discretionary powers are the basis on which corruption can be exercised with impunity.
Accountability is premised on appropriate adherence to laws, rules, and regulations; therefore, individuals in administration capacities must be held accountable and responsible for each and every action under their purview. For instance, it is a common practice in various countries for schools to request financial assistance from parents when developing a project in the school. In most cases, the benefits, objectives, estimated costs, and work plans of the project are presented to the parents in detail; meanwhile, progress reports are provided during the implementation phase. After the project’s completion, a final report is presented indicating the objective achievements, which is accompanied with full disclosure and audited report. In such conditions, it is possible to hold the respective authorities accountable (Heidenheimer & Johnston, 2009). However, when there is a disregard of the rules, there is no accountability, hence paving the way for corruption.
Corruption thrives in countries the systems of which have a significantly large number of rules, laws, regulations, and administrative authorities restricting economic and business activities. Therefore, creating numerous opportunities for the generation of monopoly profit, more so, where such restrictive factors are opaque, complex, and applied in a secretive, selective, non-transparent, and inconsistent manner. Meanwhile, the atmosphere where administrators are allowed to have significant discretionary powers in relation to the interpretation of rules or are afforded with a significant leeway on deciding the application criterion of rules creates an opportune environment for the corruption to thrive (Detzer, 2010).
Additionally, the same case applies when administrators are allowed to make decisions on the basis of where, how, and to whom the rules are applicable or are mandated to alter, amend, and rescind established rules and invoke restrictive measures aimed at supplementing the existing rules. In light of this, it is evident that corruption thrives in situations when institutional strategies and mechanisms are not implemented with the aim of holding administrators accountable for their jurisdiction, actions and those under their purview.
Corruption has the potential to occur on various levels; however, it is most identifiable on two levels: high level and low level. High level corruption is characterised through wrongdoing at the higher levels of institutions and governments. This form of corruption is prevalent with people in leadership and managerial positions such as politicians and directors of various governmental and non-governmental institutions (Campos & Pradhan, 2007). These individuals at the top level are well-remunerated; therefore, their corruption is not linked to their pay or meeting basis needs for their dependants.
Therefore, corruption at this level is attributable to greed and other factors such as the desire to remain in the office or gain more power in the hierarchical structure of the system. For instance, as a consequence of the expensive nature of political electoral campaigns, campaign financing often gives grounds for the corruption to thrive; hence, campaign financing is a thorny issue in most countries (Sampford et al., 2006). This is impacted by the need to hand out favours among colleagues, political allies, and subordinates to be assured of their loyalty and cooperation.
Meanwhile, corruption at the lower level is significantly motivated by income factors such as low incomes and meagre wages, for instance, a person making underhand payments to a clerk in order to expedite issuance of a license. Therefore, a significant percentage of civil servants and other low level employees in various sectors engage in corruption as a result of necessity and not because of their greed. However, this can be prevented if such employees were adequately paid to cover their living costs and the costs of their dependents. Pay increments will result in minimised corruption since these individuals will no longer rely on illegal and unethical activities to supplement their pay; furthermore, with the increased pay they be inherently vested in preserving their jobs through ethical and legal practices (Rose-Ackerman, 2006).
Meanwhile, the motivators for corruption vary from an individual to an individual; as such, it is significantly difficult to differentiate which people are motivated by need or greed in their corrupt activities. This is because at the lower levels corruption is a factor of need; however, as the individual rises through the pay hierarchy, this motivation changes to that of greed; as such, it is difficult to ascertain at which point need changes to greed (Campos & Pradhan, 2007). In light of this, increasing pay without implementing complementary initiatives may not have any significant impact on mitigating corruption. As a result, the benefits accruing to the government or employer may not equate the high amounts of budgetary allocations for payment increments.
Moreover, an increment in salaries to civil servants in an inflationary economy might send the wrong signal to businessmen who in turn inflate the prices of commodities. Incremental wages leading to higher costs and prices are an indicator that real wages have not increased; therefore, the welfare of employees does not change, but remains low (Campos & Pradhan, 2007). Incremental pay, which leads to a subsequent increase in prices, has the impact of deteriorating economic conditions for all. In light of this, there is a critical need for macroeconomic stability to be restored through controlled inflation while addressing the fundamental causes for economic destabilising and speculative behaviour.
While the low pay encourages corruption, it has other detrimental impacts on the performance and attitudes of public employees. These include low morale, absenteeism, increased inefficiency, moonlighting, and loss of respect; as a result, these employees are indifferent and rude in their transactions with the public. Hence, they become a nuisance while adding little value to the public (Heidenheimer & Johnston, 2009). In such circumstances, the recruitment process is significantly difficult since there is scarcity of good workers who are willing to remain in their low paying jobs; thus, most of them seek alternative employment elsewhere. It is evident that elimination of corruption must integrate a comprehensive reform in the civil service, which includes the adjustment of wages to cover living costs when the inflationary trend has been mitigated; as such, due care and attention are required in areas where such circumstances are prevalent.
The incidence of corruption is subject to various factors; therefore, it varies from one society to another where it can be systematic, widespread, or rare. Where corruption is rare, it is easily detected, isolated, and punished to prevent it from spreading further. This is because widespread corruption is significantly difficult to control; however, a corruption becomes unmanageable when it is systematic (Detzer, 2010). Systematic corruption is characterised through corrupt indicators in institutions, laws and rules, and people’s attitudes and behaviour, which adapt to corrupt methods of executing tasks; therefore, it characteristically becomes the basis in which people operate and live. As a result, systematic corruption is significantly difficult to defeat while its impacts have detrimental implications for the country’s economy.
Corruption is more prevalent in developing and underdeveloped countries; however, corruption in these countries also impacts countries, which are developed. As such, developed countries are also concerned with the impacts of corruption in developing countries (Rotberg, 2009). Various governmental institutions and nongovernmental organisations in developed countries act as donors and aid providers to developing countries. Therefore, the prevalence of corruption in developing countries has led to critical considerations aimed at determining whether donations and aid to these countries are used for their intended purpose and people.
Donors and global financial institutions such as the World Bank and IMF have observed that the impacts of aid and donations given to developing countries are negligible as a result of chronic corruption in these countries (Campos & Pradhan, 2007). Therefore, significant attention is given to a country’s level of corruption before giving aid. Moreover, the advancements in technology have made it easier for financial markets to be integrated where millions are transacted form one country to another through a simple touch of a button. As such, corruption has been integrated in technology spreading across international boundaries. In light of this, corruption cannot be associated with developing and underdeveloped countries; however, it is a global menace, which requires an international response (Rotberg, 2009).
The consequences associated with corruption to the economy are detrimental. These have been illustrated where corruption is in grand scales attributable to political leaders, involving embezzlement of public funds, wastage, mismanagement, social decay, and inequality that are associates with it and can be destructive to a country’s economy. Meanwhile, some political leaders have looted their countries and stashed their loot in various foreign banks.
The impacts of these actions, more so to developing countries facing severe and perennial foreign exchange deficiencies, are evident and require expedient solutions; however, corruption does not necessarily have to be committed on a grand scale for its impacts to be felt. Corruption is inherently a deep-rooted political, economic, and institutional shortcoming and weakness in any given country. Therefore, efforts to counter corruption must address its fundamental causes through economic, institutional, and political reforms.