Shleifer revenue in productivity-enhancing areas such as education, health,

Shleifer and Vishny (as
cited in Claros, 2015, p. 4) define corruption as “the sale by government
officials of government property for personal gain”. Due to fear of
interference in domestic politics, corruption was never put in the spot light
at international institutions such as International Monetary Fund and World
Bank. Hence, each developing state practiced corruption in discreet and as a
result, this has led to the collapse of central planning in developing
countries (Claros, 2015).

Corruption practices in
developing countries has led to the impeachment, and loss of trust by
electorates of several political leaders. For example, in India and Pakistan
two Prime Ministers were defeated after being acquitted of all charges of corruption.
In Brazil and Venezuela the heads of state were impeached and dethroned after
they were found guilty of corruption practices.

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Thanks to the
introduction of Transparency International (TI) and Corruption Perception Index
(CPI) that corruption activities are being closely monitored. With the
introduction of Transparency International, anticorruption initiatives oversee
that public procurement and freedom of information laws are free from
corruption. The CPI is there to grade the rate of corruption practices in each
country using a simple index. However, CPI is disliked by many governments,
suggesting that it is effective (Claros, 2015).  

Corruption corrodes the
foundations of a stable society in the following various ways:

Impacts
on public finances where taxpayers begin to distrust
government revenue because the government keeps failing to invest such revenue
in productivity-enhancing areas such as education, health, and infrastructure.
Foreign aid is also discouraged to assist financially due to fear of enriching
the “already” rich through corruption practices.

Undermining
of private sector development. Due to a corruptly
bureaucratic system, inflated financial costs, and psychological burdens which
are put in place deliberately to frustrate entrepreneurs, the economic growth
of the country is affected negatively because the private sector is discouraged
to flourish.

Distortion
of incentives. Due to large sums of money that come along
with large projects, government representatives are tempted to do whatever it
takes to ensure that such projects benefit them and their relatives without
considering the productivity of the investments of such projects.

Worsened
income distribution. With corruption, the rich will get richer,
and the poor will drown in a pool of extreme poverty. Also, because of
financial powers, the wealthy and well connected citizens will use their
connections to ensure that the tax system works in their favour.

Betrayal
of trust. Corruption in the society causes the citizens of a
country to question and doubt the credibility of government, thereby resulting
in the majority to lose trust in its government. Once, this trust is broken, it
will be a challenge for the government officials to persuade individuals and
businesses to continue paying their taxes.