Costs Of Corruption Research Articles

The impact of corruption on ESG based on EU countries

Motivation: The impact of corruption on core ESG measures for EU countries has not yet been studied. There are few analyses in the literature on the relationship between corruption and ESG from a ma-cro level, and only such analyses allow an indication of the costs of corruption and the effects from fighting it at the country level. Aim: The study aims to ocean the impact of corruption on ESG measures: CO2 emissions, life expectancy and economic growth in the EU. Calculating the cost of corruption is key to properly assessing the effectiveness of anti-corruption projects. Results: The effect of corruption on ESG measures was shown to be heterogeneous. A non-linear relationship between corruption and CO2 and economic growth was shown, while the relationship between corruption and life expectancy was linear. The impact of corruption on ESG should be considered from the point of view of the ESG component variable in question, rather than on the basis of synthetic ESG measures.

Neutralizing the tentacles of organized crime. Assessment of the impact of an anti-crime measure on mafia violence in Italy

Organized crime tightens its corrupting influence on politics through violent intimidation. Anti-crime measures that increase the cost of corruption but not of the exercise of violence might, on the one hand, lead mafia-style organizations to retaliate by resorting to violence in lieu of bribery. On the other hand, this kind of anti-crime measure might also induce criminal clans to go inactive, owing to the lower expected payoff from the “business” of influencing politics, which would reduce violence. To determine which of these possible effects is prevalent, we undertake an empirical assessment of the impact of city council dissolution for mafia influence in Italy as prescribed by Decree Law 164/1991 in discouraging violence against politicians in the period 2010–2019. The difference-in-differences analysis shows that in the dissolved municipalities the enforcement of the Law reduces violence and that the effect persists (at least) for seven years after the compulsory administration. The most likely driving channel of this result is the renewed pool of politicians elected after compulsory administration.

Corruption and Co-Optation in Autocracy: Evidence from Russia

Do corrupt officials govern differently in elected office? This article develops a theoretical framework and analyzes new data from financial disclosures to estimate the governing costs of corruption. First, I uncover substantial hidden wealth held by roughly one quarter of the legislators in the Russian Duma; these “kompromat deputies” are vulnerable to damaging information being used against them by the regime. Analyzing their behavior in office, I find that these deputies are less active and more absent members of parliament. When called to vote, kompromat deputies from the opposition also more eagerly support the regime’s political agenda. Finally, kompromat deputies are less likely to win reelection, suggesting that they have shorter time horizons as well as that parties have incentives to rotate them out. Autocrats permit and then monitor corruption in order to co-opt potential challengers, who in turn trade loyalty to the regime in exchange for opportunities to self-enrich.

Normalizing or Breeding Social Evil? Painful wading in the Ghosted Cost of Corruption in Kenya

Normalizing or Breeding Social Evil? Painful wading in the Ghosted Cost of Corruption in Kenya

Effect of Corruption on Human Capital in Franc Zone Countries: An Opportunity Cost Analysis

The objective of this paper is to analyze the impact of corruption on human capital in African Franc zone countries. Assuming that the representative agent is rational, we develop a theoretical model in which effort, the real component of the human capital accumulation process, encompasses learning time, the learner’s personal resources, and the educational public good. The learner makes a trade-off between effort and corruption according to the opportunity cost of each option. Thus, in an environment where corruption (large and small) is endemic and where there are very few sanction mechanisms, the learner considers it rational to bribe at the expense of effort. Empirical analysis shows that a drop in the corruption perception index (reflecting an increase in corruption) of one-point leads to a drop in the human capital index of 0.175 percentage points. On the other hand, the impact is positive for public spending on education, official development assistance, real GDP per capita, and the management ratio. These variables reduce the opportunity cost of the effort. A number of recommendations are put forward with a view to reducing the cost of effort and increasing the cost of corruption.

Do corporate regulations deter or stimulate investment? The effect of the OECD anti-bribery convention on FDI

AbstractCountries prohibit firms’ transnational financial crime by coordinating their regulations under international organizations (IOs). Under these IOs, states threaten to prosecute firms’ foreign misconduct at home. Such threats can help conscript companies to diffuse sustainable business models abroad. This paper studies the effect of corporate criminal regulations on firms’ foreign direct investment (FDI). Critics of these policies claim they push firms’ investment away from host economies where financial crime is more likely to happen. Yet, regulations should also cut informal costs of crime and favor investment. I reconcile these opposed expectations and show they are special cases of the same argument. I claim that the effect of multilateral anti-bribery policies on FDI depends on the level of corruption of the host economy. It is null in non-corrupt countries. It is positive where corruption is moderate: here, laws provide legal leverage to refuse paying bribes and cut corruption costs. The effect is negative where corruption is endemic: here, anti-bribery laws expose firms to additional regulatory costs. I support the argument with multiple evidence. Company-level data on investment by 3871 firms between 2006 and 2011 show that regulated corporations have a $$27\%$$ 27 % higher probability of investing in moderately corrupt economies than unregulated firms, which plummets to $$-52\%$$ - 52 % in extremely corrupt countries. A synthetic counterfactual design using country-dyadic FDI flows corroborates this finding. Results show that regulatory policies harmonized by IOs change international competition for FDI in ways that do not necessarily harm regulated firms.

A Study on Corruption in Chennai City

Corruption has a lot of attention around the world. This study discusses issues related to the characteristics, causes, consequences and possible corrective actions. This paper also investigates whether the costs of corruption are conditional on the extent of government intervention in the economy. Corruption takes place behind closed doors, which makes empirical research on corruption challenging. After decades of corruption research find out still struggle to produce reliable measures and assess the success of anti-corruption efforts. Three pillars are considered to essential for the country’s growth, namely, the legislative, the executive and judiciary. These pillars when they are deviating from the established righteous path, corruption erupts to an unimaginable Level. The present study focuses on Tamil Nadu State primarily and the outcome of the study nature, concept and causes shown by way of using simple Percentage analysis.

Definition and Measurement of Corruption in the States of the European Union and the Use of Directions for Assessing Corruption Actions in Ukraine

The article reveals issues related to corruption, which has a negative impact on social security, public spending, budget deficit, tax collection, vulnerable employment, gender equality and the use of EU funds, and approaches to its measurement. It is noted that corruption is associated with an increase in the level of organized crime, a weakening of the rule of law, a decrease in voter turnout in parliamentary elections and trust in state institutions. It is noted that the pandemic and subsequent socio-economic crises called into question the adequacy of the existing mechanisms for controlling the unprecedented volume of finances within the framework of the EU recovery plan. In this complex context, legal and policy frameworks as well as EU instruments that assess anti-corruption efforts are important at all times. But at the same time, all EU member states, solving this problem, have different approaches and methods of its grouping and measurement. According to the conducted studies, there are currently no corruption-free zones in the EU, as all member states have touched this problem, albeit to varying degrees. The concept of corruption is defined as a broader socio-economic problem that covers a number of issues, namely: conflict of interests; clientelism; various forms of favoritism; influence peddling and other similar forms of behavior. A study of modern statistics of corruption offenses as of the first half of 2023 was conducted, which shows positive developments in Ukraine in the fight against corruption, but at the same time, the rate of violations of financial control requirements remains extremely high. Given the difficulty of directly measuring corruption, various (indirect) indicators have been developed based on the perception or experience of this phenomenon and an attempt to quantify the cost of corruption in the EU. It is noted that the main international study is the Global Corruption Barometer (GCB), which collects data on the experience and perception of corruption around the world since 2003. In 2021, the Global Corruption Barometer (GCB) – EU focused on measurements in EU Member States, which confirmed the widespread perception of corruption in Europe and showed that EU citizens are concerned about the close ties between business and politics. Therefore, in the article, the author examines issues related to the measurement of corruption for the possibility of more accurately forecasting the development of this negative phenomenon in the future and taking appropriate preventive measures.

The costs of bureaucracy and corruption at customs: Evidence from the computerization of imports in Colombia

We assess the effects of the computerization of import transactions in Colombia on import volume, port efficiency and the performance of manufacturing firms. Staggered implementation allows us to identify the causal effects of the reform. We find that computerization triggered a significant increase in reported imports in reformed ports compared to nonreformed ones, along with a sizeable increase in tax collection. Our results indicate that a combination of factors underpin the increase in declared imports: an actual increase in firms’ imports, a reduction in import underreporting and a redirection of imports from nonreformed to reformed ports that reveals importers' preference for the latter. Other signs of reduced corruption include increased predictability of clearance times and a reduction in the number of customs-related corruption cases prosecuted by the authorities. Importantly, increased imports lead to better firm performance: in municipalities associated with treated customs, sales of manufacturing firms increased by 5.2% for importers and shrunk by 3.9% for nonimporters. These effects increase over time and are concentrated in small- to medium-sized firms, which appear to have been the most affected by the nontariff barriers before computerization.

Evolution and Development of Forensic Accounting

This study examines the evolution and development of forensic accounting. Since the study uses a library approach to look at the evolution and development forensic accounting, it is qualitative in nature. The analysis of the available literature revealed that forensic accounting combines knowledge and skills obtained from law, computer science, auditing and accounting to investigate issues reported (reactive) and predicted (proactive). We discovered that forensic accounting is a pragmatic profession. Therefore, it (forensic accounting) will be one of the brightest professions of the future with the cost of fraud and corruption to governments and the private sector and with the spread of industry 4.0 applications (artificial intelligence, big data, cloud computing and block chain). The future of forensic accounting will be shaped by technological advancements, specialization, regulatory compliance, interdisciplinary collaboration, and a focus on continuous professional development.

Terrorism on the rise – What can WCA countries do to combat difficulties with international trade?

In the last 5 years, the center of gravity of terrorism has shifted from the Middle East and North Africa (MENA) region to sub-Saharan Africa. As of 2018, this region had the highest number of fatalities and the greatest material damage. This paper assesses the situation of the countries most affected by terrorism in the WCA (West and Central-Africa) region by examining economic complexity, the costs of cross-border trade and corruption. The AEO (Authorized Economic Operator) program is a means of ensuring the security of international supply chains while simultaneously facilitating the cross-border flow of goods. By 2020, 97 countries in the world had operational AEO programs, but only one country in the WCO (World Customs Organization) WCA region had implemented one. The threat of terrorism is very high in seven countries of the region: Nigeria, Burkina Faso, Cameroon, Democratic Republic of Congo, Niger, Chad and Mali. As a result of the evaluation, it can be concluded that these countries need mechanisms to facilitate international trade and would benefit from the implementation of the AEO program.

Natural resources and exports diversification in Cameroon: Does corruption matter?

This paper examines the role of corruption in the relationship between natural resources and exports diversification 1980–2020) through the bound test of co-integration and the Fully Modified Ordinary Least Square (FMOLS). The main findings reveal that, natural resource accentuates export diversification. However, in the long run, oil resources accentuate export diversification while forest and mineral resources decrease export diversification. Also, in the short run, executive corruption accentuates with no limit, the concentration effect of natural resources on export diversification. While in the long run, executive corruption instead mitigates the negative effect of natural resources irrespective of their type on export diversification. Natural resources curse export diversification if the executive corruption is below certain thresholds. These findings imply that in the Cameroonian context of cumbersome and bureaucratic regulations, the cost of corruption is lesser than cost the of administrative bottlenecks, leading to the corollary that corruption may favors export diversification when production and export processes present barriers that exceed a certain threshold. Cameroon authorities should therefore curb these cumbersome and bureaucratic procedures that are costly and that harm export diversification.

ECONOMIC JUSTIFICATION OF CORRUPTION RISKS IN THE FIELD OF HEALTHCARE

The purpose of the article is to identify the most common corruption offenses in the healthcare sector and their impact on the country's economy, and also to outline the main directions of the state anti-corruption policy in this area. Methodology. The research is based on the study of international treaties ratified by Ukraine, as well as domestic legal acts regulating the activities of the medical sector in the area of combating and preventing corruption. Results. The article analyzes the main directions of anti-corruption policy in the national healthcare system and determines their impact on the economy of the country. It is noted that corruption in this area is inherent in all socio-economic systems of the world, however, it is most widespread in the process of transformation of the economic and social environment. Corruption can manifest itself in various mechanisms. The author analyzes the monitoring of corruption risks in the field of security by Transparency International, which annually determines the Corruption Perceptions Index (CPI), and the European Commission. It is theoretically proven that a decrease in the score of the Corruption Perceptions Index leads to an outflow of capital from the country (one point corresponds to 0.5% of the country's gross domestic product). Using the examples of the United States of America, the Federal Republic of Germany, and Denmark, the paper examines the most common forms of corruption in the healthcare sector, as well as the positive experiences that should be implemented in order to improve the level of economic development of the country. The main corruption risks in the healthcare sector were analyzed. The role of the NAPC and the NABU in combating and preventing corruption in the healthcare sector is revealed. Practical implications. The article outlines the main steps that need to be taken to introduce changes in the direction of anti-corruption activities in private healthcare institutions. The role of the electronic system of public procurement of goods, works and services "ProZorro" in combating and preventing corruption in the healthcare sector is determined. The analytical data of the Independent Anti-Corruption Commission are studied. Value/originality. It is theoretically substantiated that the key task of the state anti-corruption policy in the healthcare sector is to develop and implement mechanisms for detection, prevention and elimination of conditions that facilitate the emergence and spread of corruption, the impact of which on the country's economy is quite dangerous, as it significantly impairs the effectiveness of the state's economic policy. The article highlights the consequences of corruption in the healthcare sector for the country's economy: expansion of the shadow economy; violation of competitive mechanisms; inefficient use of budget funds in the distribution of public contracts and benefits; price increases due to "corruption costs"; and deterioration of the investment climate. The article outlines the main areas of anti-corruption policy in the healthcare sector, including: an effective system of control and transparency; analysis of the causes of corruption; a high level of legal awareness and culture of citizens; involvement of specialists and scientists in the areas of activity in the preparation of relevant regulatory documents; improvement of the electronic healthcare system and, consequently, further automation of workplaces; change of the financing system; improvement of the anti-corruption policy in the healthcare sector as a component of the overall anti-corruption policy; implementation of positive international experiences.

CORRUPTION MANIFESTATIONS IN THE SYSTEM OF ECONOMIC SECURITY OF ECONOMIC ENTITIES

The article establishes the impact of corruption on the economic and national security of the country, what dangers and threats it poses to economic entities. The role of corrupt practices in the economic activity of economic entities was considered. The approaches of scientists to the understanding of the concept of "economic security" were studied and the author's interpretation of it was proposed. Thus, economic security is proposed to understand the state of protection of economic interests of individuals, society and the state from internal and external threats, which contributes to economic development. The most negative consequences of the impact of corruption on the economy, creating a threat to the economic and national security of the country, have been disclosed. These include the expansion of the shadow economy, violation of market competitiveness, inefficient use of budget funds, higher prices for products as a result of "corruption costs", deterioration of the investment climate, increased corruption in non-governmental organizations, the merger of crime and the legal economy, lack of effective private owners, declining confidence in the state, etc. It is also noted that corruption has a positive impact on the economy and political development of the country. The dynamics of the Corruption Perception Index, corruption manifestations are analyzed. The causes of obstacles to foreign investment in the economy of Ukraine, the severity of different types of corruption and the level of corruption in different areas of public activity according to the results of a survey of the population and businessmen, conducted by the National Agency for the Prevention of Corruption in 2021, were studied. It is noted that Ukraine is doing a lot on the way to overcome corruption, but its efforts do not achieve the desired success because of the habituation to corruptive manifestations of the population. The impact of corruption on different spheres of social life and sectors of the economy, enterprises of different types and forms of ownership was characterized. It is noted that the main emphasis in combating corruption should be focused on the ways of determination, and the main determinants of corruption have been identified. The factors forming the demand for corrupt agreements and becoming threats to the economic security of economic entities have also been studied. The directions of prevention of corruption threats to the economic security of the country and entrepreneurship are proposed.

Poco-poco implementation of the death penalty for corruptors in the time of force majeure

Under the legal basis, a pandemic is included in the time of force majeure, "extraordinary" time, or disaster time. In such a situation, the crimes committed will be threatened with heavier punishments than in normal situations. However, the reality that appears until 2021, the heaviest punishment ever imposed in a corruption case is a life sentence. This study aims to find out what causes the ambiguity of the judge's imposition of the death penalty for corruptors during force majeure. With a qualitative approach, the author concludes that in positive Indonesian law there is still the threat of the death penalty for perpetrators of crimes, such as crimes of corruption, especially in certain circumstances. The reason why the judges are ambiguous in imposing the death penalty for corruptors is because the loss to the state which is also the loss of the people has not yet become a feeling of justice. Thus, the death penalty in corruption cases is rarely even never applied so that the judge is giddy, not firm in enforcing the threat of punishment in this case. Novelty of this research, it is necessary to develop efforts to impose the Social Costs of Corruption.

Fostering the Return of Compatriots (Concerning Rehabilitation of Ethno-Cultural Principle)

To ignore the ethno-cultural principle in defining the notion of ‘compatriot’ means recognition of too wide circle of people as such. Today the risk of turning the State program on fostering voluntary migration of compatriots from the repatriation project (the initial idea) into foreign labour recruiting is obvious. For instance, opportunities are limited for elderly and people with moderate means, who know Russian, belong to peoples of Russia and are ready to integrate into Russian society; representatives of title nations of some post-soviet states are recognized as compatriots though they do not possess the mentioned-above socio-cultural features; the same corruption costs typical of labour migration are formed; the quality of human capital provided at the expense of the State program does not comply with the Constitution of the Russian Federation and needs of Russian society development. To fill state policy with the adequate repatriation content it is necessary to revise its goals, bring them into line with the Constitution; to concretize the legal basis of the repatriation institution (return to the homeland) of compatriots, primary importance should be assigned to cultural-morale categories but not to economic ones. The key sociocultural features are mastering the Russian language, belonging to peoples of Russia and readiness to integrate into Russian society. Ideology of the State program should proceed from repatriation aims but not from recruiting ones. The author points out that it is necessary to reform the system of the State program implementation by providing it with the adequate way of selecting candidates in accordance with their socio-cultural features; opportunities to support elderly and those with moderate means for returning them to the historic homeland; elimination of commercial element in work with compatriots (both in countries of departure and on the territory of Russia); infrastructure for initial adaptation and further integration in Russian society. The article analyzes certain aspects of the State program and aims at identification of system problems of this repatriation project, as well as formulation of suggestions for their settlement and optimization of state policy in the field of migration.

Causas, efectos y costos de la corrupción en el Perú

This work analyzes the causes, effects and costs of corruption in Peru, seeking to know and understand more about this phenomenon, cause-effect of our underdevelopment, with the fundamental objective of contributing to its understanding and perceiving the harmful effects for Peruvian society and its high economic and moral costs, in order to try to combat it more efficiently and effectively.

The Impact of Bribery Relationships on Firm Growth in Transition Economies

This study explores how bribery affects firm growth by focusing on the asymmetric dependence of firms on government resources and services. We conceptualize bribery as relationships through which bribery requests require firms to frequently interact with rent-seeking government officials. Through bribery relationships, such officials extort firms beyond the exchange of bribe money for preferential treatment, depriving acquiescing firms of time and effort and thereby imposing hidden costs that could be otherwise used for firm growth. We find that bribery relationships damage firm growth. Firm status such as introducing new products or not affects how rent-seeking government officials check on firms and calculate their extortion schemes in bribery relationships; bribery relationships damage firm growth more significantly for firms without new products. The damage of bribery relationships to firm growth is also contingent on institutional environments. Under pervasive corruption, firms in bribery relationships may increase their acquiescence to the extortion of rent-seeking government officials. In countries with high-quality governance, however, firms can depend on sound regulations and rules of law and government officials experience high moral costs of corruption. Thus, the negative effect of the bribery relationship on firm growth will be strengthened under pervasive corruption and weakened under high-quality governance. Using Business Environment and Enterprise Performance Survey and World Governance Indicators data for 28 Eastern European countries from 2002–2014, we demonstrate the multifaceted features of the bribery relationship and its interaction with country-level institutional environments. Supplemental Material: The online appendices are available at https://doi.org/10.1287/orsc.2022.1575 .

Inventory control of multiple perishable goods using deep reinforcement learning for sustainable environment

Perishable goods like fresh produce are growing part of today’s e-commerce projects. Due to their perishable nature, traditionally they have accounted for a high share in the inventory cost management. In current pandemic times, when all the business are suffering, inventory control becomes all the more important for a sustainable environment. There is a need of calculated buying and selling of products as the supply chain has effected in a major way. Aiming at the cost control problem for these enterprises, this paper proposes use of Deep Reinforcement Learning (RL) techniques for the inventory management of perishable goods. The paper models the retailers inventory limitation factors and also models real-world parameters like overdue cost, shortage cost, lead time and corruption costs across multiple products. The simulation experiments show that the proposed RL models are able to reduce inventory cost and spoilage rate of the goods when the products lead times and life cycles are known along with the distribution of the demand of the products.

Local corruption, total factor productivity and firm heterogeneity: Empirical evidence from Chinese manufacturing firms

• A novel dataset to measure local corruption in China that controls for officials’ rank, tenure, investigation reason and corruption latency. • Corruption has a significant negative effect on manufacturing firm TFP, conditional on firm and city heterogeneities. • Publicly owned, export-oriented, profitable, faster growing firms and firms in concentrated industries are less sensitive to corruption. • Firms in cities with higher levels of human capital and public spending on education and scientific research are less sensitive to corruption. • Corruption also hurts private ownership, investment rate, export intensity, innovation, leverage, employment growth, and profitability. This paper examines the effects of local corruption on total factor productivity (TFP) of manufacturing firms in China. The empirical analysis is based on a novel corruption dataset we developed on local corruption in China at various disaggregation levels. The empirical results using fixed effects and instrumental variable estimation methods suggest that corruption has an economically and statistically significant negative effect on firm productivity. The estimated economic cost of corruption is found to be high; a one standard deviation increase in corruption reduces firm TFP by around 3.8%. We also find that firm heterogeneity shapes business reactions to corruption in a given geographical location. Increasing corruption hurts firms less when they are publicly owned, export-oriented, more profitable, have faster growth, or operate in industries with lower levels of competition. We also show that firms in cities with higher levels of human capital and higher levels of public spending on education and scientific research are less sensitive to corruption. As for transmission channels, we find that corruption is likely to hurt TFP through its negative effects on private ownership, investment rate, export intensity, innovation, leverage, employment growth, and profit.