Corruption in Third World Countries | Free Essay Example

Corruption in Third World Countries

Words: 642
Topic: Business & Economics


Corruption is one of the major causes of underdevelopment in developing states. It is viewed as misappropriation of public funds. It involves using public resources to benefit an individual. It is never accidental but intentional. The senior government officials collaborate with their juniors to deprive the public its resources. Major forms of corruption are economic in nature. The civil servants as the representatives of the government come up with policies that will benefit them or their bosses. In terms of employment, the corrupt officials use favor in assigning roles to individuals. Unqualified persons end up receiving well paying jobs because their relatives are bosses. In the market, weak companies are offered protection. The companies enjoy wider markets without substantial competitors (Tanzi, 1995).

Causes of Corruption

Corruption has been going on in developing nations mainly because of the patron-client relationship kind of politics. The political class request to be endorsed by the people as their leaders promising to reward them with certain goodies. The less developed regions remain underdeveloped if they do not produce leaders who will lobby for them. Resource allocation is not done on merit because certain sectors are given priority with the intention of gaining political mileage. The elected leaders come up with popular policies that serve the interests of the few. Their personal self-interests guide their motives to loot public coffers.

Another cause of corruption is the belief system. For instance, in Africa a leader is never justified to be strong politically if he/she does not make him/herself and his/her people strong economically. By trading and distributing goods and services, the leaders propagate corruption by enhancing speculation of commodities in the market. Contracts are awarded to friends and relatives (Baumol, 2002).

Instead of leaving the market logics to operate on their own, the state intervenes from time to time making corruption to be easily exercised. The market and the state are intertwined with the political elite controlling the economy. The political class comes up with ideas of mercantilism while confusing the public that they want to safeguard national interests. The rich in most cases are the ones controlling both the state and the economy (Shleifer & Vishney, 1993).

Effects of Corruption

The economy finally has ended up being controlled by rich foreign companies. The multinationals dictate on what they want to the government. This interferes with state sovereignty. They bail out states due to their massive resources. The state cannot carry out its functions effectively. The opinion of the companies is considered even when the actions to be taken are against them. This has led to poor working conditions since the labor laws made are favorable to multinational corporations (Tanzi, 1995). The security of the state becomes shaky due to corruption. For instance, the drug lords have taken control of Columbia because the state officials receive some benefits of the trade. Incidences of crime such as rape, carjacking and robbery have increased with criminals using their economic potentials to buy justice. The common person has no right since the state acts according to the wishes of the rich.


The cases of corruption increased during the cold war since countries were not being held responsible by the then super powers. The powers were concerned about selling their ideologies. The West wanted to dominate the whole world with capitalism while the East pursued the idea of Communism. After the cold war, the only super power that remained (USA) made it a condition for developing nations to be accountable if they were to receive any form of aid. This made the International Monetary Fund and the World Bank to introduce structural adjustment programs. It was necessary for states to liberalize their economies and privatize the local companies. This was an attempt to reduce corruption that failed. The program tried but corruption had inner roots and was deeply rooted in individuals.


Baumol, W.J., 2002. The Free-market Innovation Machine: Analyzing the Growth Miracle of Capitalism, Princeton and Oxford: Princeton University Press.

Shleifer, A., & Vishney R., 1993. Corruption, Quarterly Journal of Economics, 108. pp. 599-617

Tanzi, V., 1995. Corruption: Arm’s-length Relationship and Markets, in Fiorentini, G. and Pelzman, (eds). The Economics of Organized Crime, Cambridge: University Press.