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CORRUPTION (Department of Economics) PowerPoint Presentation

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Published on : Feb 10, 2014
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Slide 1 -

CORRUPTION Transition Economies Presented By AJ Cericola

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Definition of Corruption Misuse of Power for private gain  Bribery  Extortion  Manipulation of Laws It’s all about growth…

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Corruption Type 1: State Capture Corruption  Influencing Laws, Regulations, Policies for own advantage

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Corruption Type 2: Administration Corruption  Intentional imposition of distortions in the prescribed implementation of existing laws

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Corruption Across the Globe

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Corruption and Growth

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Corruption and Development

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Sectors of Corruption: Enterprise Growth SME’s are most important for jobs, innovation, and growth 1. Labor force and new jobs 2. Less capital intensive – more labor 3. Product innovative, not process innovative 4. More financially constrained; represent 94% of business finance 5. Contribute to growth in recession more than larger firms

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Bribes Paid

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Sectors of Corruption: Investment Much economic theory assume positive relationship between investment and growth 4 areas Corruption affects investment: 1. Total investments 2. Size and composition of FDI 3. Size of public investment 4. Quality of decisions and projects

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Sectors of Corruption: Investment Studies show that improvements in the corruption index (i.e. reduction in corruption) can increase investment GDP ratio Comparison: 1% increase in MTR on FDI = reduction of incoming FDI ~ 3.3% 1pt. increase on corruption index = reduction in the flow of FDI ~ 11%

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Anti-Corruption: What can be done?

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Case Study: Poland 1956: Khrushchev denounces Stalin Worker’s strike in Poznan starts market socialism and limited civil liberties 1980: emergence of Solidarity 1989: parliamentary political system with proportional representation Strong public administration skills

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Case Study: Croatia & Slovak Republic Advanced among Central & Eastern European countries Nationalism Concentration of political power 1994: worst year of corruption for Slovak Republic and Croatia

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Croatia

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Slovak Republic

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Case Study: Latvia State Capture is high Economy is highly concentrated: political parties run close with economic interests 1995: adoption of conflict of interest laws 1997: Corruption Prevention Council

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Latvia

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Transparency: CPI Index

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After thoughts… Why does Poland have a decreasing CPI? Do they not have an anti-corruption strategy? Can bad infrastructure cause corruption? Your Questions…

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