Political Corruption and Economic Effects It Has


Corruption can be compared to a malignant cancer cell that eats into the society’s cultural and political pillars and ultimately compromises the functioning of its essential components. Corruption is a global vice, but it is deeply entrenched in the poverty stricken nations of Sub-Saharan Africa, Latin America and is growing fast in the post-communist nations. For this reason, corruption has become the major issue in the last three decades, producing various alternative explanations as well as remedies. From a political perspective, corruption is engraved through malpractices among the political class and bureaucrats, who selfishly want to enrich themselves and use public power for personal gain. From a basic understanding, political corruption entails the use of power by those in authority with the purpose of illegitimate gains. For instance, such practices include bribing, embezzlement of public funds, nepotism, and extortion among others.

Corruption is fast finding its way in the political and economic sciences owing to the roles of the state along with its being an indispensable tool for economic advancement. By and large, corruption is an essential component in a renewed paradigm, where development facilitates economic reforms that are dependent upon political governance. Indeed, political corruption is a multi-faceted phenomenon that draws diverse definitions in terms of the actors involved, initiators, and profit-making parties. Moreover, the affiliated causing factors and consequences of political corruption with their different forms are sought in individual ethical arrangements as well as in economic and political systems. This research paper focuses on the diverse aspects of corruption in the context of political involvement and in relation with its effect on the global economics.

Literature Review

Political corruption is an old and perplexing vice that has been in existence within all corners of the globe and is not a preserve of the developing nations. Ideally, corruption is a cancer in politics, as it was outlined by Plato and Aristotle. The notion of political corruption has then grown over to modern era among the political philosophers including Machiavelli, Rosseau, and Montesquieu. According to the Transparency International organization, corruption is a big challenge for today’s world. It is a vice that greatly undermines good governance, poor allocation of resources, and also hurts development in both private and public sectors. In conventional political science, corruption is largely attributed to mal-functionalities of the political system and more so to the aspect of the democratic deficit. The latter systems are in essence lacking proper structures of power-sharing formulas along with the deficiency in accountability and transparency in the respective institutions. As argued by the law of democratization, the magnitude of political corruption is inversely related to the amount of power that rests with the politicians.

Public contracting that is surrounded by corrupt thinking has always blend poor quality results at inflated prices. For instance, over 2000 people died in Algeria after an earthquake, but the government opted to relax the procurement legislation in a bid to speed up reconstruction. This was, however, an action that was bound to result in poorly structured work and a loop hole for corruption. The political scientists argue that, characteristically, political corruption is  a form of transaction that involves an illegal conversion of public property to private property. The problem with this definition is that it does not bring out the distinction between bureaucratic and political corruption. It focuses on the way the state and its players get involved in corrupt deals with regard to the levels of authority where corruption is largely entrenched. Political decision makers are the key players in this vice, including the law makers, who bend the very law they make in their favor.

Political decision makers use their political power to gain wealth. Status and power is a good outfit for political corruption, which well distinguishes it from bureaucratic or petty corruption that occurs in public administration. However, this distinction is not clear, as it argues about the separation between politics and administration, which is ambiguous according to the nature of political systems. This type of corruption usually takes place at the high levels of a state, and it has repercussions. According to Guetat, political corruption impacts decision making as well as leads to resources misallocation in a state.

As a mitigating measure many countries of Latin America have introduced bans and limits on private finances dedicated for electoral campaigns. However, in the nations where bans and limits have been placed, it is not very clear how the control bodies are mandated to ensure implementation. Paraguay, for example, bans funding through multinational firms as well as works of political parties’ global foundation. Also, Bolivia, Argentina and Brazil have imposed a ban on contributions made form religious groups and other non-governmental organizations.

Indeed, wherever there is political inequality, there is political corruption. This is the case in South Africa, where there is eminent racial disparity, with analysts arguing about an increased multiracial class that is composed of one-third of the population owning most of the country’s property. Amidst the government’s endeavors to ensure development, the country has remained a microcosm of globalization dilemma with a major problem in promoting political equality. South Africa has no measures to curb the private financing of the political parties, and hence the wealthy individuals can literally purchase influence by secret donations and thereby compromise the value of a vote. The biggest scandals in corruption within the liberal democracies indicate that corruption is not a preserve of the authoritarian nations. Maintaining the relationship between political corruption and authoritarianism serves the  interests of those governing the country.

Theory of Extractive Corruption

This theory is based on the state-society relationship. The theory, however, considers the state as a powerful party. It can be seen that the corrupt state agents are the most magnificent beneficiaries of this poor system, and particularly the powerful elite use state apparatus to enrich themselves. The theory of extractive corruption is founded on the political framework ideology of authoritarianism, whereby the rulers are only concerned with their interests. Authoritarian leaders use their power to gather resources from the state for individual gains mindless of the economic impact. Indeed, the extractive theory emphasizes the concept that “power tends to corrupt and worse still, absolute power corrupts absolutely,” as pointed out by Assiotis and Sylwester. The latter concept of authoritarianism is historically dated to the classic works of Greek philosopher Aristotle. He argued that there is a clear difference between the rule of law and that of force.

Politically, authoritarian leaders have taken advantage of the system to enforce the use of complex arrangements such as single party rule and presidential system. To ascend to power, they are always determined to walk any way, including using censorship and electoral mal-practices. They also disregard the existing laws in order to create their own unjust laws alongside violating human rights through torture and imprisonment. From an economic perspective, political corruption is a way of economic accumulation with an individual motive adopted by the authoritarian leaders. This theory is applicable to flexible neo-patrimonial systems, mainly in Latin America, Asia, and Africa. According to post-communist nations, there is evident engagement of private characters in matters of political corruption. For instance, in Ukraine and Poland, statistics indicate that about 25 percent of the kickbacks are destined for individual accounts.

Similar to classical patrimonialism discussed by Max Weber, neo-patrimonialism comprises of a political system where the big leaders have authority in individual patronage instead of through the rule of law. However, the theory of extractive corruption emphasizes that embezzlement is the key in economic accumulation, whereby the ruling elite extracts resources better than extracting through bribery. For instance, Felix Boigny, who is a former president of Cote d’Ivoire, put up a basilica at the cost of $145 million, but in reality this was twice the amount needed. Another form of embezzlement is seen when those in power use their mandate to accumulate and acquire private business entities. According to the Global Corruption Report, Indonesia’s President Mohamed Suharto is accused of having embezzled approximately $35 billion within a country, whose Gross Domestic Product (GDP) falls below $700 per capita. There are usually high levels of corruption in the political finance, especially involving buying votes and using illegally acquired funds to entice their followers with ‘juicy’ appointments.

Extortion is another mode through which those in power usually extract resources. They begin by creating an environment of insecurity, where the people are intimidated, and hence this class of mafias uses the opportunity to extort money in exchange for the so needed peace. Extortion is a kind of political corruption that assumes a redistributive form of extraction, whereby it works from below. For instance, in Italy and Russia, this class of people applies their influence on individual government officers or a state agency by imposing threats, intimidating, and eventually assassinating them. These practices earn them a free leeway in taxation and legal obligations.


From the theory discussed I can derive a hypothesis: with well-established structures of political corruption, there is the resultant massive negative impact on the socio-economic status of the country and continued oppression of the poor. The independent variable, in this case, is political corruption while the dependent variable is the negative impacts on the socio-economic status of the nation.


I am certain of these results because corruption of whatever nature works like an informal institution which duly substitutes the monopoly nature of political powers. Also, these leaders always want to convert public resources into an individual beneficiary that sustains an informal political framework. Although corruption is not a variable that can be measured directly, I plan to adopt various indices that focus on corruption, including Corruption Perception Index (CPI) as well as the Worldwide Governance Indicator (WGI). The WGI is best for measuring political corruption within the private and public sector with the consideration of opinion polls and the opinion of experts. On the other hand, CPI is the measure of political corruption in the public sector.

My dependent variable, negative impacts on socio-economic status of the nation, is a composite of the people’s economic empowerment within the various aspects of education, income, health, and occupational status. I will have the values running in a range of 0 to 10. This index is a measure of family resources, including basic needs such as quality food, shelter, education, and other entities like access to government services. The Statistical Package for Social Sciences (SPSS) will be used for ensuring organization, coding, and analysis of data. For the descriptive data collected, I plan to use frequency, percentage and mean. Finally, the relative effects and relationship between the independent and dependent variables were tested under the multivariate regression analysis.


Political corruption is, in essence, the abuse of political power by the individuals in authority in order to gather resources for individual enrichment. Politically, corruption undermines the rule of law by flouting the duly structured formal processes, hence compromising on accountability, provision of services, and efficiency of public administration. The most affected areas are Africa, Latin America, and Asian countries. These countries with their corrupted economies cannot function as expected since the system bars the functioning of the natural laws.

From an economic point of view, political corruption causes distortion with the public sector by channeling public resources into capital projects, where bribery is the order of the day. With widespread levels of corruption, the cost of operation for the respective governments goes extremely high, and there is a limitation on the resources set for public services. This has obviously a distorting effect on the decision-making processes of the government. Also, there exist neo-patrimonial systems, whereby the political powers in governance are bestowed with selfish desires of realizing interests of the corrupt elite group. This is evident in the theory of extractive corruption where the authoritarian rulers use their power to extract resources and channel them towards individual gain.