Economic Development and Corruption Essay Example | Topics and Well Written Essays - 1500 words

Economic Development and Corruption - Essay ExampleIn a growth economy there is improvement in the standard of living of people and focus on environmental stability also increases. Economic stability flowerpot sometime also give rise to materialism. People strive hard to make more money and they often use unethical means to reach out their materialistic targets. One such unethical method is corruption. Different people hold different views about the impact of corruption on the frugal development. legion(predicate) people view it as a barrier to economic development while others believe that it does not impact the society and economic development a great deal (Easterly 2006). This paper is going to discuss various anecdotal evidence and view that people have about corruption in relation to economic development. Economies in the transition face often have large number of lobbying efforts going on. These economies are aiming for economic development and hence they do not care suc h(prenominal) about lobbying efforts and governments of these economies are more susceptible to lobbying pressures than a government of a more developed nation. The evidence and research shows that these lobbies often pay huge effect of money to the government pressures to accept their demand. The corrupt political system in these countries makes it possible for people to form lobbies and put pressure on political leadership. These leaders often get directions from these lobbies if they pay them well. Since m all lobbying groups are fighting for what is good for their own business, they end up doing well for the society also. The theory of invisible lapse comes into play here. The theory states that any action done for ones own self motive or profit will eventually sympathize into good for the society. Hence, corruption in all cases is not bad and research on 4000 firms in ontogenesis countries shows that corruption has played a role in the economic development of a nation. (Cam pos & Giovannoni 2007) In another paper, it was argued that corruption is essentially bad for a development economy. First of all, corruption reduces the value of shareowners. In growing economies where corruption is extremely high, the expected profit that the shareholders expect to make does not materialize. Much of the profit is lost in the corrupt red-lines of bureaucracy and hence shareholder value goes down in the corrupt economies. Many foreign companies therefore try not to invest in corrupt nations fearing that returns on investment in these economies would be far less than if the investment is made in the local setting. This reduces foreign direct investment flows into the corrupt economies and poses a big problem for the economic development. This argument shows us that corruption can be a big barrier in the economic development of a nation. (Weitzel & Berns 2006) In a recent paper written by a well known economist, it was argued that corruption is actually good for the economies. It increases the flow of wealth in the economy from one eliminate to another and promotes economic activity which leads to economic development. It was argued that corruption becomes bad when the corruption money goes out from the system. Evidence shows that many political and rich figures in the developing economies put their money in bank accounts in the foreign countries. This is an example of money flowing out of the system and this money does not promote any