Economic Analysis of the Consequences of Corruption
I. A Reduction in Investment and Capital Inflows
Both Lambsdorff (n.d) and Tanzi (1998) are in agreement that corruption reduces the attractiveness of a nation to investors. Investors in this case should be understood to be both domestic and foreign. To this effect, Lambsdorff (n.d) affirms that corruption increases the risk factors of a nation, which are taken into account in determining the economic viability of a particular country as a destination for investment. Tanzi (1998) also reiterates that high rates of corruption serve to increase economic uncertainty, which in return increases cost of investment, especially in regards to taxation. A reduction in investment, more often than not, ultimately negatively impacts on the economic growth of the nation because production, which stimulates growth, is …show more content…
In relation to the first pillar, Bannon (1999) states that the World Bank has established an oversight committee to look into allegations of corruption in bank-financed projects, including the assessment of corruption-related risks. In regards to the second pillar, Bannon (1999) states that the Word Bank supports the Anti-Bribery Convention on an international scale, and is working closely with international organizations to minimize cross-border corruption. In regards to the third pillar, the Word Bank asserts that countries with high corruption rates are limited in their prospects for financial assistance. Finally, the World Bank has pledged its support to countries that have taken steps to address corruption by reforming economic policies and
I. A Reduction in Investment and Capital Inflows
Both Lambsdorff (n.d) and Tanzi (1998) are in agreement that corruption reduces the attractiveness of a nation to investors. Investors in this case should be understood to be both domestic and foreign. To this effect, Lambsdorff (n.d) affirms that corruption increases the risk factors of a nation, which are taken into account in determining the economic viability of a particular country as a destination for investment. Tanzi (1998) also reiterates that high rates of corruption serve to increase economic uncertainty, which in return increases cost of investment, especially in regards to taxation. A reduction in investment, more often than not, ultimately negatively impacts on the economic growth of the nation because production, which stimulates growth, is …show more content…
In relation to the first pillar, Bannon (1999) states that the World Bank has established an oversight committee to look into allegations of corruption in bank-financed projects, including the assessment of corruption-related risks. In regards to the second pillar, Bannon (1999) states that the Word Bank supports the Anti-Bribery Convention on an international scale, and is working closely with international organizations to minimize cross-border corruption. In regards to the third pillar, the Word Bank asserts that countries with high corruption rates are limited in their prospects for financial assistance. Finally, the World Bank has pledged its support to countries that have taken steps to address corruption by reforming economic policies and