The Costs of Corruption Around the World
Some authors have compared corruption to an odorless gas that creeps in and ”confounds policy objectives” – it’s difficult to detect and root out, but can have a deep and lasting impact.
Even the definition is nebulous, encompassing everything from bribery and embezzlement to vote buying and price fixing. At its broadest, corruption is “the misuse of office for unofficial ends,” according to Robert Klitgaard, author of Controlling Corruption.
How Prolific is Corruption Worldwide?
Corrupt officials in developing countries alone accept as much as $40 billion in bribes every year. In the 2013 Global Corruption Barometer, more than one in four people worldwide reported having paid a bribe within the past year when interacting with public institutions. More than half of the people surveyed said their governments are ineffective at fighting the problem.
In the United States, 60 percent of people believe corruption is on the rise. More than three-quarters of Americans consider political parties to be the most corrupt organizations, followed by the legislature, the media, public officials and businesses.
What Are the Costs of Corruption?
It’s hard to assess the costs of corruption, but most nations agree they are massive. Some experts estimate it drains more than 5 percent of the global gross domestic product every year – about $2.6 trillion. What’s even harder to measure is the toll corruption takes on human well-being and societal growth.
In some cases, those who can’t afford to pay a bribe might be blocked from buying a home, starting a business or utilizing basic services. And for women with children or those who live on less than $2 a day, corruption could require making tradeoffs between getting healthcare and going hungry.
In addition to its economic toll, the United Nations says, corruption:
- Undermines democracy and the rule of law
- Leads to human rights violations
- Distorts markets
- Erodes quality of life
- Opens the door for organized crime and other threats to human security
Across the board, corruption interferes with achieving the world’s sustainable development goals for the next 15 years, which include:
- Ending poverty and hunger
- Providing good health and quality education for all
- Achieving gender equality
- Ensuring clean water and renewable energy
- Developing sustainable cities and communities
Corruption saps community resources, diverting funds away from the public initiatives needed to reach these goals. For businesses, corruption hinders business growth, escalates costs, undermines fair competition, and presents financial, operational and reputational risks.
What Can Your Organization Do?
Maintaining vigilance against corruption at your organization is essential to rooting it out-especially when you operate across the globe or when you work with third parties. Actions you can take include:
- Anti-Corruption Training: Make sure you train your c-suite, employees and third parties on corruption and bribery laws.
- Due Diligence on Third Parties: Ensure that you thoroughly review your third parties and complete all due diligence activities.
- Set Limitations on Gifts: Confirm that employees understand the limits on gift, travel and entertainment and who is included as a government official.
- Review Your Policies: Monitor and audit your policies and program to make certain that it’s effective and make changes if it isn’t.
Corruption has a seriously negative impact on the world, and it can also have a massive impact on your organization. But fortunately, there are steps you can take to mitigate your risk and to help end corruption.
If you are interested in learning more about our anti-corruption training courses, request a demo today.