Corruption Is Defined As The Appropriation Of Public...

Corruption is defined as the appropriation of public resources for private profit and other private purposes through the use and abuse of official power or influence (Smith, S, C and Todaro, M, P, 2012, P.546). Examples of how governments do this can be through collecting bribes for providing permits and licenses, for giving passage through customs or for prohibiting the entry of competitors (Shleifer, A and Vishny, R,W, 1993, P.599). Corruption varies across different economies, which we will analyse throughout this assignment, we will also be using several economic theories to help analyse the effects of corruption on economic growth. Firstly we will observe a theoretical example of corruption by Becker and Stigler (1974) and see how it†¦show more content†¦Corruption also has negative consequences for human development as well as economic growth (Houston, D, A, 2007, P.325) particularly in emerging economies because less money is spent on developing human capital levels, an example of this is with Somalia. Somalia is currently ranked 176 and has been ranked the most corrupt country in the world according to Corruption Perceptions Index (2016) for several years. The Russian Presidency of the G20 state that there is also a very strong negative correlation between perceived corruption and the level of output, hence relating to why Somalia have such a low rate of economic growth, the annual growth rate was expected to be 1.98% according to Trading Economics global macro models (2016). Another theory which analyses corruption in a different way is the Principal Agent Problem. This is a problem generated from the relationship between the principal and the agent. The principal is the one who assigns tasks to an agent, whom then fulfils the task on behalf of the Principal. However if there’s a difficulty for the Principal to monitor the agents actions, the agent then has an incentive to cheat the principal, thus resulting in the Principal Agent Problem (Shah, S,N, 2014, P.1). The affect that the Principal Agent Problem has on economic growth depends on which theory we take intoShow MoreRelatedNigeria Is The Chronic Level Of Corruption1566 Words   |  7 Pagesmost pervasive and destructive issues facing Nigeria is the chronic level of corruption. Africa’s most populous country with over 170 million people, modern Nigeria emerged from British colonialism gaining full independence in 1960. After many years of military rule, a 1999 constitution heralded a move to a civilian democratic government which has been in place ever since. 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