The effects of corruption on economic development

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On 28 April 2004 Daniel Kaufmann, global governance director of the World Bank Institute, commented on the costs of corruption, stating that: ‘A conservative approach to such measurement gives an estimate for annual worldwide bribery of about $1 trillion dollars.’

Corruption can take many forms that vary in degree from the minor use of influence to institutionalized bribery. Transparency International’s definition of corruption is: “the abuse of entrusted power for private gain”. This can mean not only financial gain but also non-financial advantages.

The definition of corruption and how much money it involves is not a particularly challenging notion to tackle. This paper, rather, brings to the attention of the reader the economic importance of combating corruption. The aim is to show the reader: 1- the role law plays in economic development, 2- the negative effects of income inequality on sustainable economic development and importance of redistribution on grounds of the Marginal Utility theory, 3- redistribution as the most effective method of eradicating poverty, 4- the negative effects of low approval ratings (unhappiness) on sustainable economic development and 5- the negative effects of corruption on redistribution as well as approval ratings and consequently on sustainable economic development…

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