Corruption results in loss of 2% of GDP every year

October 11, 2015

PerformanceGurus Staff

Lima, Oct 12 (IANS)

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]A[/dropcap]round $1-1.5 trillion or around 2% of global Gross Domestic Product (GDP), are lost to corruption every year, president of the Natural Resource Governance Institute (NRGI) has said. This figure is only the direct costs of corruption as it does not factor in the opportunities lost on innovation and productivity, it added.

Speaking at a panel on integrity in public governance during the World Bank Group and International Monetary Fund annual meeting on Sunday, Daniel Kaufmann, president of (NRGI), presented the statistic, result of a study by the NRGI, an independent, non-profit organisation based in New York.

“The misallocation of talent away from productive activities and innovation” has a costlier impact on countries suffering from corruption in the long term.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]A[/dropcap] country that addresses corruption and significantly improves rule of law can expect a huge increase in per capita income in the long run, the study showed. It will also see similar gains in reducing infant mortality and improving education, said Kaufmann.

Countries with better control of corruption averaged a 5% improvement in their budget deficits or surplus in the long term, he said.

“(Corruption… is a) tax on the poor and, increasingly, the middle class… leading to higher levels of inequality”.

– Daniel Kaufmann, President of NRGI

Based on the findings of the study, Kaufmann called for a new definition of corruption.

Believing that corruption is no longer a simple transaction between two parties, he called it a “tax on the poor and, increasingly, the middle class… leading to higher levels of inequality”.

“Corruption has shifted to large colluding networks, such as FIFA. These networks shape the rules of the game, institutions, policies and contracts. This is more insidious than petty corruption,” he said.

Note:
1. Some of the content is used from IANS.