Corruption and Public Welfare

Corruption is a major detractor from global welfare and local economic development. Its consequences are shoddily built roads, structures that collapse, clinics with equipment purchased at high prices or inappropriate specifications. In all such circumstances vast public expenditures do not achieve the envisioned use and local interest suffers.

Typical side payments are 10-15 percent of all major expenditures, with much higher levels in the developing world. “It is human nature to lubricate relationships with gratuity” was a typical statement, with more diversion attributed to high-context cultures [e.g., Latin American, Latin Europe, and Asia] and less to low-context ones [e.g., United States, Northern and Germanic Europe]. Yet, the social acceptance of corruption was seen as a bigger danger because it protects the elite from domestic scrutiny and control. Therefore, the ongoing impact of the U.S. Foreign Corrupt Practices Act and the OECD discussions were seen as instrumental in reducing or at least containing such misappropriations. More multilateral action is seen as necessary to ensure broad, continuous and relentless enforcement of measures against violators. Beneficiaries of ill gotten gains from bribery should eventually be pursued globally to disgorge their ill gotten gains.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 105.

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