The two most profound consequences of graft and corruption are a reduced level of confidence placed in authority figures and an overall detrimental effect on the economic viability of the state or organization under question. Each of these effects can be felt regardless of whether the transgressions are committed in a public or private capacity.Continue Reading
Whether in the public or private sector, graft and corruption tarnish the reputation of leadership and erode its effectiveness. This is particularly the case in public situations, when civic and community leaders are found guilty. The Anti-Corruption Internet Database states that it has the threefold effect of undermining "democracy and good governance, eroding government institutions, and undermining the legitimacy of government" itself.
On the economic side, graft and corruption cause unnecessary disruptions and "distortions" in the flow of capital, according to the Anti-Corruption Internet Database. Appropriate receptors of funds suffer, whereas elements of the population that are already fiscally sound experience enhanced profits. At the national level, these and similar crimes tend to frighten off foreign and domestic investment because businesses don't trust the state or its functionaries. As a result, the economy is further impaired, and opportunities for basic citizens are further reduced. Unfortunately, these dynamics can lead to a vicious cycle. As many states with high bribery and corruption levels are third-world nations, the persistent menace of these crimes serves only to keep their economies from growing sufficiently enough to improve their status, and the poor impression offered by their leaders continues to stifle interest in outside parties who might otherwise have been willing to invest in those countries.Learn more about Investing