Corruption Essay

1918 Words Apr 27th, 2016 8 Pages
The Effects of Corruption and Economic Growth
Cassandra Rogers

Economics 523
Dr. David Dieterle
Table of Contents
Abstract……………………………………………………………………………………………3
Effects of Corruption on Economic Growth………………………………………………………4
Definition of Corruption..................................................................................................................4 Economic Rent…………………………………………………………………………….4 Bribery…………………………………………………………………………………….5 Trade Restrictions…………………………………………………………………………5
Is Corruption Good or Bad for an Economy………………………………………………………6 Low Levels of Corruption…………………………………………………………………6 Vietnam’s Economic Growth……………………………………………………..7 High Levels of Corruption………………………………………………………………...8
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But it’s not just individuals in public office that are corrupt. Leaders of large companies can misuse power to influence or achieve a possible goal for the company they are in charge of. Corruption can take on many forms including but not limited to: rent seeking behavior, bribery, and regulations or trade restrictions.
Economic Rent The term rent or rent seeking is not what we pay to the landlord of our apartment or house. According to Mauro (1997), rent (which is short for economic rent) is the overage paid to somebody or something that is useful and whose supply is either limited by nature or human cleverness. An example of economic rent is when the U.S. government restricted the import of Japanese automobiles to a limited quantity, thus creating a shortage of foreign automobiles. Not only did U.S. automobile manufactures like General Motors sell more cars, but they also raised their prices knowing that consumers would pay it and in turn enjoyed the economic rent, which is the overage between the domestic cars and the cheaper but more unavailable Japanese cars (Mauro, 1997). Some rent seeking activities are legal, however, some are not and along with rent seeking behavior we see often see bribery.
Bribery
Every day we hear about an executive or a business that has attempted or has succeeded in bribing a government official to restrict competition so that their firm or their industry can realize a rent. In fact, it’s

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