Corruption

CORRUPTION IS THE misuse of public power for private benefit. The process of corruption involves private and public interests or services. Corruption affects public responsibility and the private domain and usually takes place at the interface of the public and private sectors. However, the World Bank has defined the corruption as “the abuse of public office for private gain.” That definition is not quite complete from a scientific point of view, as a definition of corruption depends on a country's economic and political system, development level, and traditions and customs.

Corruption's negative impact is not in doubt. It diverts resources from their planned usage, destroys economic systems, and makes a country inefficient when competing with other countries. Corruption exerts an especially hard toll on the lives of the poor by decreasing employment possibilities, causing higher prices, and demanding additional fees for government-financed public services.

Especially in developing countries, corruption makes it harder for people to meet fundamental needs such as food, health, and education. At the same time, it creates discrimination among the different groups of society. Corruption, by itself, doesn’t create poverty. However, it has direct outcomes on economic and governance characteristics, intermediaries that in turn produce poverty. Finally, it can be recognized that corruption is only one form of bad governance.

The first classification of corruption is based on its distinct forms, namely bribery, embezzlement, fraud, and extortion. Bribery is usually described as obtaining money or favors by politicians or bureaucrats in return for preferential decisions or government services. Bribery acts involve two sides, mainly a representative of state and a civilian. In this transaction the representative of state misuses his or her power.

Embezzlement is associated with theft of resources by disloyal employees from their employers. There usually is no client involved during the embezzlement act. Embezzlement can derive from the impression that “everyone is doing it.” Fraud is an economic crime that involves some kind of trickery, swindle, deceit, manipulation, or distortion of information, facts, or expertise. Quite often we observe that bribery directly involves fraud. On the other hand, fraud also arises when public servants take a role in organized crime like smuggling, or when contracts are given to a company whose public administrators have a conflict of interest with their responsibilities. These public servants’ behavior is sometimes described as lawless behavior because state officials act as if there were no existing rules or regulations. Extortion means that resources are extracted by the use of coercion, violence, or threats to use force.

There are two types of corruption: petty and grand. Petty corruption involves small payments paid to low-level public servants. Usually, public servants charge a fee in addition to the amount required by law. They may threaten harassment or delay services until this payment is made. This type of corruption has a negative influence on the quality of life and the economic opportunities of poor people. The additional costs of petty corruption can be vast and severely limiting for the economic activity of the poor, as costs of bribes can reach nearly seven times the regular costs incurred.

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