Malematsa

Topics: Political corruption, Economics, Economic growth Pages: 26 (7807 words) Published: October 8, 2013


What is the Impact of Corruption on Economic Development in the Newly Industrialised Countries of South East Asia?

Political Corruption | L2046

Abstract
Corruption, a previously neglected issue, became one of the greatest preoccupations of Western powers trying to bring stability and prosperity to global markets. This essay seeks to establish the relationship between corruption and development. The focus of this paper will be the South East Asian Newly Industrialised Countries (NICs). I suggest that whilst it is difficult to ascertain the exact impact of corruption on development, in the absence of corruption, even greater and more sustained levels of development can flourish. I argue that despite arguments to the contrary, all corruption is inimical to the process of sustainable development. I suggest that the impact of corruption on development is clearly discernable though examination of the Asian Financial Crisis of 1997. This event demonstrated that whilst development and corruption can coexist, corruption creates unsustainable inefficiencies and inherent weakness in the economy for the long term.

Table of Contents

Abstract2
Introduction4
Perspectives on Corruption6
Corruption and Development7
Influencing Government7
Predictability8
Innovation9
Competition & Efficiency11
Government Policy12
Methodology15
The Asian Miracle and Corruption16
The Paradox of Corruption and Growth16
Tangible Costs of Corruption18
Intangible Costs of Corruption20
Uneven Impact of Corruption and Development21
The Asian Financial Crisis23
Crony Capitalism23
Unveiling the Impact of Corruption 25
Conclusions27
Bibliography29
Books 29
Journals29
Online Sources30
Other31
Appendices 32
Introduction
The post Cold War, globalized era of the 1990’s saw a renewed interest in corruption and its impact. Corruption, a previously neglected issue, became one of the greatest preoccupations of Western powers trying to bring stability and prosperity to global markets. But is the pursuit of an anti-corruption agenda really conducive to development? Corruption has always existed, in all societies and at all stages of development. The dominant discourse suggests that systemic corruption is a major impediment to sustainable economic development yet despite extensive normative discussion on the merits of the absence of corruption, little academic discussion based on empirical evidence demonstrates the validity of this argument.

This paper seeks to establish the relationship between corruption and development. The focus of this discussion will be the South East Asian newly industrialised countries (NICs). NICs are countries exhibiting considerable industrialisation having switched from agriculture to industrial production. South East Asian economies, including South Korea, Taiwan, Hong Kong and Singapore, achieved exponential growth from the 1960’s to the late 1990’s when the Asian financial crisis took effect. The transformation from poverty to affluence was widely heralded as the success of capitalism over communism and a demonstration of the success of liberal, free market principles. However, while the governments were ostensibly laissez-faire, in practice they were quite active in their economies. It is within this context that the study of corruption in NICs is so fascinating. Despite bureaucracy within the market and widespread corruption, remarkable economic development prevailed. What remains unclear is to whether this was because of or in spite of corruption. Can some corrupt activities actually be beneficial to rapid development?

In only focussing on economic development, just one facet of the multi-faceted issue of development, is addressed. The reason for this focus is for reasons of brevity and that unlike aspects such as political or social development for which improvements or otherwise is harder to prove, economic development is more quantifiable. A holistic approach...

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