Corruption

Negative effects of corruption on Economic growth:

Corruption defined as the misuse of public power for personal gains is a forefront issue around the world, especially in developing countries.

For instance an investigation has shown how deep corruption imbedded in Ghana is jeopardizing its development economically.

1) High prices to consumers:

When entrepreneurs and businessmen are required to pay bribes before necessary permits are issued, they tend to view it as a cost of doing business and therefore pass that cost onto consumers, who suffer from high prices.

2) Government’s inability to finance budget expenditures - Deficit Financing

By affecting tax collection, corruption has adverse budgetary consequences. Tax revenue is used to finance budget expenditures, therefore with reduced tax revenues; the revenue section of the national budget is reduced, resulting in adverse budgetary consequences.

Corruption can have a negative effect on foreign investment because for most foreign firms corruption is a cost of doing business to be recouped from revenues. Consequently if the costs become too high or unpredictable, they disengage or shun the country altogether. High levels of corruption add to the risk of Ghana being marginalized in the international economy.

3) Corruption reduces Investment and Economic Growth

Finally empirical research and regression analysis indicates that the amount of corruption is negatively linked to the level of investment and economic growth, that is to say, the more corruption, the less investment and the less economic growth.

Admittedly, the investigation has exposed the typical bureaucratic fraudsters, but beyond that it has also shown the insidious nature of corruption by the very people who are supposed to protect the country and more importantly illustrated the extent of corruption in Ghana.

Conclusion:

From the cumulative force of the above points, it is clear that corruption has a strong potential to steal the wealth...