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READING & WRITING

04 OCTOBER 2022

CORRUPTION & POVERTY

INTRODUCTION —

This report builds on more recent research that describes corruption as a principal-

agent problem whose significance for growth depends on factors related to the nature of

the corrupt transaction itself, such as distinctions based on the agents involved, scale, type

of deal, predictability, industrial organization, etc., all of which affect, for better or worse,

the nature of the relationship between principals as represented by the public interest and

the politicization of government.

Thus, one could view corruption as an issue with incentive-design. However, the

research also makes the case that corruption has a more extensive component that is

influenced by the historical and social context. The elements discussed here include those

that have an impact on social cohesiveness, government economic policies, the political

system, the volume of market activity, and the rate of economic growth.

CLAIMS OF FACT. The most popular definition of corruption is "the abuse of public power

for private advantage," which can be overly wide depending on how one defines "public

power" and "private gain." It is clear from this definition that corruption fundamentally

incorporates the concept of the "public" For this reason, it is common practice to view the

government and its always complicit public employees as the primary sources of

corruption.
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Recent usage, however, also refers to "private corruption" as involving organized crime or

occurring in corporate firms. Examples include the overcharging of personal bills at the

expense of the firm, overpricing by supply managers, and so on. They can also take many

different forms, such as when public employees demand or accept payment or favors in

exchange for services, when politicians misuse public funds, or when they award jobs or

contracts to their supporters, particularly when businesses bribe officials to secure

advantageous deals.

Corruption destroys confidence, undermines democracy, stifles economic growth, and

makes inequality, poverty, social division, and the environmental problem worse. It takes

place in the shadows, frequently with the aid of professionals who facilitate corruption

schemes, including bankers, attorneys, accountants, and real estate agents, as well as

secretive financial systems and anonymous shell corporations that enable the corrupt to

launder and conceal their illicit wealth. They also adjust to shifting conditions and various

scenarios. It may change as a result of modifications to laws, regulations, and even

technology.

Given examples of such topics that are widely held publicly or to the extent that specific
rules safeguarding the general public forbid such behavior, it is possible to make a case for
incorporating these actions under the definition of corruption. Another illustration is
trading using insider knowledge. Otherwise, these actions would amount to private harm
and would be punishable under civil law.

Lack of access to necessities like food, clothing, and shelter is also a factor in poverty,
which can lead to problems like low levels of literacy, unemployment, and even famine.
Poverty is a problem that the whole nation faces, not just one person. The scarcity of
employment prospects is one such instance. Poverty is the result, and poverty can lead to
bad behavior like robberies, kidnappings, corruption, and other crimes.
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CLAIMS OF VALUE.