Academic journal article Journal of Organizational Culture, Communications and Conflict

Corruption, Business, and Economic Development

Academic journal article Journal of Organizational Culture, Communications and Conflict

Corruption, Business, and Economic Development

Article excerpt

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

Corruption has been at the center of extensive research since the turn of the 21st century. Early corruption research can be traced back to the late 60s and before. A simple definition of corruption involves individuals who are public officials that are abusing their public office for private gain. However, some views extend that definition. Kaufmann (2015) sees corruption from a larger perspective "involving a network of politicians, organizations, companies, and private individuals colluding to benefit from access to power, public resources, and policy-making at the expense of the public good" The later form can affect the rule of law and regulations, and hence is referred to sometimes using the term State capture. Such forms of illegal activities may require widening the definition of the term corruption itself. Svensson (2005) regards corruption as a result and an indicator of the power of the political institutions of a country in addition to its economic standing, dominant culture and rule of law status and asserts that the definition of corruption itself is not definite.

Several indexes are used to measure corruption. An early measure was constructed by Political Risk Services Group, the publishers of the International Country Risk Guide. As part of a country's risk assessment, the guide tries to focus on actual and potential corruption where nepotism and political ties to businesses may take place. Their measure is a way to alert potential foreign investors of dangers that can form challenges to the government of a certain nation when corruption is exposed causing widespread discontent. Such backlash can overthrow a government and be of cost for foreign investors. Hence, the measure is designed in such a way that ties corruption to potential political instability.

A most widely used measure of corruption is the one published by Transparency International; the Corruption Perception Index. The measure utilizes data from 11 different organizations and 12 data sources and aims to evaluate the perception of corruption. The different data sources include country rankings in different aspects from the African Development Bank Governance Ratings, Bertelsmann Foundation Sustainable Governance Indicators, Bertelsmann Foundation Transformation Index, Economist Intelligence Unit Country Risk Ratings, Freedom House Nations in Transit, Global Insight Country Risk Ratings, IMD World Competitiveness Yearbook, Political and Economic Risk Consultancy Asian Intelligence, Political Risk Services International Country Risk Guide, World Bank - Country Policy and Institutional Assessment, World Economic Forum Executive Opinion Survey and the World Justice Project Rule of Law Index.

Corruption is often perceived as a developing nation's phenomena and seen as an obstacle to development. It is viewed as a major hindering factor in attracting foreign direct investment and in drafting proper development polices. However, the inquiry into whether corruption is a cause or an effect is one that frequently engages researches. Is corruption a result of poverty or a cause of it has been a major question of economic research. In addition, research has been focused on many different correlations that can be made; how corruption relates to openness and trade, income inequalities, political institutions, the degree of urbanization and many other factors. In addition, much research investigates the most effective way to decrease corruption, comparing country experiences and correlating corruption to proxies of the rule of law and efficient institutions. This paper aims to shed some light on recent trends in corruption literature, the techniques and data used and the latest findings in this area.

CORRUPTION LITERARTURE

Early corruption research can be traced back to the 1960's and 1970's. Work by Becker and Stigler (1974) focused on the relationship between the government official and the public. …

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