Corruption: The Big Problem in Developing Countries

When we are talking about developing countries, there are a lot of words that exist on our

head. It starts from poverty, inequality, malnutrition, high inflation, until corruption. This

paper will explain about the relationship between developing countries and corruption

economically and politically. However, before we see the bad effects of corruption in

developing countries, we will see the definition and good effects of corruption first.

The Definition and Classes of Corruption

Actually, the definition of corruption depends on the culture of the country. So, it is

different in each country. For example, an activity that is considered as a corruption in USA

and Europe may be permissible in Thailand. However, the general definition of corruption is

the misuse of public office or pubic assets for private gains. It includes some activities like

fraud, embezzlement, bribery, kickbacks, nepotism, favoritism, and extortion.

Corrupt activities consist of four classes. First is cost-reducing corruption. For

instance, the officials take the tax reductions of some regulation. Second is cost-enhancing

corruption. This class consists of three situations, which is where officials do monopoly

power via their control over licensing procedures, where excess demand exists for an

officially supplied good or services, and where the officials misuse of an official’s coercive

power. The third class is benefit-enhancing corruption which arises when the officials seek to

transfer benefit from another one for their private gains. The last class is benefit-reducing

corruption. This class is the opposite of the third class. For example, the officials delay the

payment of pension funds or stealing supplies from an office.

The Good Sides of Corruption for Economic Development

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 As long as today, when people hear about corruption, they always think negatively.

Actually, corruption is a criminality that we have to eradicate. However, some literatures

found that corruption is not only about negative activity. There are several good sides of

corruption though it is not always suitable in every economic condition. There may be cases

where corruption provides the grease for the squeaky wheels of a slow and cumbersome

government agency1.

One of the kinds of corruption that often can give a good effect is bribery. For

example, when companies want to start or expand their business, they have to wait for long

time until their permission is agreed. While, more job field will increase the economic growth

of a country because it’s GDP will increase, too and unemployment in this country will

decrease. Thus, bribes from the officials to the government can help them to speed the

permission.

The other example is about foreign investment. For developing country, foreign

investment is very important thing. It is because developing country not only can get more

capital from it, especially scarce capital, but also can get more knowledge of technological

and managerial. As we know, one of the problems of developing country is the lack of capital

and knowledge about how to manage them in order that the country can get more income

from this. So more foreign investment for developing country is, more income will be got by

the country. However, we have to realize to limit the foreign investment. Although it will

help us to solve the problem of scarce capital, it also can danger us if the controlling of

foreign investor is more dominant than us.

Even though there are some advantages from corruption, we have to remember that

these advantages don’t guarantee that it will not give bad impact on the other aspect of

government.

The Bad Sides of Corruption for Economic Development

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 As we see before that corruption also have good sides for economic development.

However, we may not be proud of these and then accept it in our daily activities. In the long

run, widespread corruption often creates much larger negative effects which can hinder the

dynamic efficiency of an economy. So, it’s economically harmful in many ways.

First, corruption often means that low-quality products and services are bought at a

high price, that unqualified applicants are given government contracts, and that contracts are

awarded based on nepotism and favoritism. It’s absolutely harmful for a lot of people.

Second, corruption can push foreign investor to invest their money, but it can reduce

incentives for companies to invest, which can seriously damage long-run economic growth. If

a company has to pay a bribe to get an investment license, the cost of the bribe can deter the

company from even bothering to apply. In addition, when public funds meant for

infrastructure investments instead wind up in a government official's bank account, a country

loses the gains in productivity that the infrastructure would have made possible.

Third, corruption damages a country’s development because it is highly regressive

and inequitable. This is simply because corruption ultimately is most vicious on the poor.

Poor households are likely to be excluded from public services which require grease

payments since the burden of corruption (that is, the cost of a bribe as a share of income) for

the poor is likely to be disproportionately large compared to that of wealthier households.

Fourth, when public service delivery is weak because of corruption, the poor tend to

be heavily disadvantaged as they may lack resources to obtain private services (such as in

private clinics or schools).

Fifth, in a corrupt environment, government spending tends to be diverted away from

social expenditures (such as health and education, which benefit the poor) towards

infrastructure projects that do not have function. Such projects are heavily transactional,

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yielding contracts that lend themselves to bribes. When the environment becomes purely

transactional with little focus on policy, the impacts on the poor is devastating.

Last, when infrastructure projects are financed, procurement fraud (a kind of

corruption) leads to inflated contracts which further divert scarce public resources away from

competing pro-poor programs. A sad thing is that corruption could have even more

pernicious non-economic effects on a society.

The Strategies to Control Corruption

As we have seen that the bad sides of corruption is more than the good sides of

corruption. It indicates that corruption is so harmful for countries, especially for developing

countries which the level of poor people is very high. Thus, we have to find strategies that

can solve or, at least, control this problem.

In the societal strategy, civil society is encouraged to remain vigilant and watch out

for individuals who engage in corruption and report them to the police. The government and

civil society organizations are expected to educate the general public about corruption and its

negative effects on economic growth and development. Besides that, the private press plays

an important role in this approach to corruption cleanup. It investigates and exposes

corruption, paving the way for the police to gather the evidence needed for effective

prosecution by the judiciary.

In the legal approach, the judiciary, the police, and the mass media are expected to

lead the fight against corruption. Police and judiciary officers can only perform their

functions properly and efficiently if they are not corrupt, that they are effectively constrained

by the law. If, on the other hand, these institutions are pervaded by corruption, it would be

prudent to first engage in reforms to improve their efficiency before engaging them in the

fight against corruption.

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 For instances of the legal approach is like this; in many developing countries, low

salaries for public servants have been given as a reason why some of these workers may

engage in corruption. As part of the effort to minimize corruption in the civil service, it has

been suggested that pay scales in the public sector be made competitive with those in the

private sector.

The political strategy emphasizes decentralization of power and argues that the

concentration of power in the center enhances the ability of the ruling coalition to engage in

corrupt activities. The recommendation is that the public sector be made more transparent.

For example, the public budget process should be made more open and participatory and the

outcome should be published and made available to the mass media and any other interested

individuals and groups.

Actually, there are still a lot of strategies that we can do to solve the problem of

corruption in developing countries. However, those which are examined before are the basic

strategies that everybody can do together to fight corruption.

Conclusion

Developing countries have a lot of problem that should be solved to reach the level of

developed country. On of them is corruption (based on data that is published by World Bank

about Global Corruption Report). Level of corruption in developing countries is very higher

than in developed country. Thus, they have to solve this problem; otherwise they cannot

growth and will still become developing countries which are backward.

To solve the problem of corruption in developing countries, there are 3 strategies that

can be done; societal strategy, legal strategy, and political strategy. The societal strategy can

be done by giving knowledge to people about the dangerous of corruption; the legal strategy

can be done by invite all of people, such as government and mass media, to fight corruption;

and the political strategy can be done by make the government transaction be transparent.

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 Daftar Pustaka

Alam, M. Sahid. “Anatomy of Corruption: An Approach to the Political Economy of

Underdevelopment”. American Journal of Economics and Sociology: 1989

“Corruption in Developed and Developing Countries” http://science.jrank.org/pages/7597/Corruption-

in-Developed-Developing-Countries.html

Dwivedi, O.P. “Bureaucratic Corruption in Developing Countries. University of California Press:

1967

Khan, Mushtaq Husein. “Governance and Anti-Corruption Reforms in Developing Countries:

Policies, Evidence, and Ways Forward”. Jakarta

“Korupsi di Negara Berkembang” www.legalitas.org/?q=content/tipologi-transaksi-korupsi-negara-

berkembang

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