THE NATURE OF CORRUPTION
AND ITS CONSEQUENCES
A growing body of evidence concludes that corruption has a significant adverse impact on social and economic development. This finding applies to the corruption usually associated with the public sector. It also applies to the corruption resulting from the dishonest behavior of individuals or private-sector firms, whether dealing with one another, the public, or government institutions. This emerging consensus reflects the findings of conceptual and empirical analyses of the pathways through which corruption redirects resources away from productive uses and erodes the political and business foundations necessary for sustained economic growth.
The current consensus regarding the deleterious effect of corruption on political and economic development is relatively new. Until recently some analysts posited that corruption had some beneficial effects in dysfunctional nations whose resources were largely controlled by dominant elites, had insufficiently developed institutional structures, or possessed inadequate channels through which particular groups could openly lobby for their interests. A long line of influential political scientists as well as some economists (see Rose-Ackerman 1999, 16 – 17, for a review), assigned a facilitating function to corruption, as it was presumed that it helped unlock the wheels of slow-moving bureaucracies, thus encouraging economic development.
It also has been posited that in some country settings, deeply ingrained cultural norms legitimize material or social exchanges deemed corrupt in others. What is defined as corrupt has a historical dimension as well. Definitions are mediated by the stage of development attained by a country with respect to contemporary world norms—the generic modernization concept, enhanced today by the globalization notion. In the modern world, the exchange of goods and services is increasingly regulated by legal rules, commercial practices, and codes of conduct designed to ensure at