What are the major effects of corruption?
Most scholars agree that all of the major impacts of corruption are negative. Corruption makes economic growth more difficult, increases inequality, and makes it harder for true democracy to develop.
Corruption makes economic growth more difficult because it makes it harder for businesses to emerge and grow. In a government with lots of corruption, anyone who wants to start a business has to bribe many people. This can make it very hard to get started. Businesses that want to grow will likewise have to engage in bribery. Investors will be reluctant to invest in companies in such societies because it is relatively easy for their investments to be wiped out through corrupt means. For example, imagine that you put a lot of money into a company and it becomes the best of its kind in a country. But then a competitor comes along that has better connections to corrupt officials. The officials give that company favors and put obstacles in the way of your company. Eventually, you lose not because their company was better but because they had better connections in a corrupt society. These sorts of issues curtail economic growth in corrupt countries.
Corruption also breeds inequality. When corrupt officials decide who gets business opportunities and government services, only those with money and/or connections will prosper. People who are poor or unconnected will have much less opportunity. Those who are already rich or well-connected will get more than they already have. This exacerbates inequality.
Finally, corruption inhibits the growth of democracy. If government is corrupt, people will not trust it and will not feel that it works for them. If government is corrupt, people will compete to control the government so that they can use it to make money for themselves. They will not want to control government to help their country. Instead, they will want to control it because it gives them opportunities to engage in corruption and enrich themselves, their associates, and other people around them. This erodes faith in government and creates a culture in which people see government as a money-making opportunity, not as a body that represents them and which works for the good of their country.
In all of these ways, corruption has exceedingly negative effects on countries where it exists.
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