Just a Way of Life?
People often think corruption is ‘just a way of life’, but every society, sector and individual would benefit from standing United Against Corruption. On this International Anti-Corruption Day we recognize that corruption is a major hindrance to stability, security and sustainable development. The scale of the issue is huge. Sixty-eight per cent of countries worldwide (with a total of 6 billion people) have a serious corruption problem. Not one single country, anywhere in the world, is corruption-free.
But what is corruption and what does it mean for those living in society and how can it be tackled?
One definition of corruption is ‘the abuse of entrusted power for private gain’. It can take many forms. Corruption can be grand corruption committed at a high level of government that distort policies or the central functioning of the state, to allow leaders to benefit at the expense of the people. Petty corruption involves the everyday abuse of entrusted power by low- and mid-level public officials in their interactions with ordinary citizens, who often are trying to access basic goods or services in places like hospitals, schools, police departments and other agencies. And political corruption is a manipulation of policies, institutions and rules of procedure in the allocation of resources and financing by political decision makers, who abuse their position to sustain their power, status and wealth.
But beyond the definitions and the figures, what does it mean for ordinary citizens trying to live and operate where corruption is rife? What does it mean for businesses operating in corrupt systems?
Many companies perpetuate corrupt practices, paying bribes to rig bids to win public procurement contracts. A commonly cited World Bank estimate from 2005 places the total cost of corruption around $1 trillion annually. Some estimates place the total cost of corruption at more than 5 percent of global GDP each year, which amounts to $2.6 trillion, or 19 times larger than the $134.8 billion spent globally on official development assistance (ODA) in 2013. The Center for Strategic and International Studies produced a report using World Bank data in February 2014 that estimated private sector corruption alone accounted for $515 billion or more annually. It is estimated that the financial burden on the private sector organizations is around 10% or more in terms of added costs of doing business in many parts of the world. The result is that economic growth is impeded, competition distorted and serious legal and reputational risks for businesses are incurred. The WEF estimates that moving a business from a country with low corruption to one with medium or high corruption constitutes a 20 percent tax increase for that business.
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