Corruption Although some researchers focus on the desirable side

Corruption
is defined as abuse of public wealth for private interests by a particular
class of people. It has several forms such as nepotism,secretly funding of
political parties, close and endangered tie between political elites and
business world, bribery in public sector etc. In the theory, the relations of
the corruption-economic growth literature contain two opposing views. Although
some researchers focus on the desirable side of corruption that is accepted a
kind of tax for making government services more efficient and removing
established rules’ barriers in front of the entrepreneurs, empirical studies shows
the negative effects of corruption such as increase of inequality, poverty and
budget deficit, decrease on investment growth, decline on the efficiency of
public spending, breaking on political legitimacy and hindrance of the
democratic developmentin the long term.Voskanyan (2000) examines theadversely
affected situation of the economic and political developments in Armenia, which
is overly corrupt according to Transparency International’s index, by using
content analysis and historical / comparative analysis. He also supports his
hypothesis with the interviews with former and current public officials
(including the financial sector and local authorities) and private
entrepreneurs as well as analysis of articles from different newspapers. For
reducing corruption in Armenia, this study tries to reach some findings and
benefit from the experiences of other countries that have succeeded in fighting
corruption.Historical/ comparative analysis gives a way for evaluating the
Soviet period and understanding the on-going corruption in the country.
Pressure on citizens’ civil and political rights and active role of the
government above the citizens increased the corruption in country. So, although
several reforms, such as reforms on juiciary system, tax, etc., could implement
for reducing corruption, he states that the best reform for Armenia are to held
the free and fair elections, to have citizens who know political rights, and
uncorrupt leader. Even in the legislative branch of Armenia, the most of the
deputies are businessmen who were elected by bribing people and work for
personal interests such as paying less taxes, creating new businesses etc.
(Voskanyan, 2000 p.43).

In
the beginning of 21th century, empirical research about corruption’s effects on
the different spheres of people has increased. Popova and Podolyakina (2014)
examine the corruption- social system relations and impact of corruption on
national economy growth and social development during 2005-2011 period with the
division of countries in the context of adopted social models functioning in
the European Union, these are Scandinavian ModelAnglo-Saxon Model (or Liberal
Model), Continental European Model (or Conservative Model), Mediterranean Model
(or Subsidiary Model) by using qualitative content-analysis, comparison,
methods of grouping, statistical analysis, correlation and regression
analysis.Functioning social systems sphere such as healthcare and education is is
a kind of investment to human capital development that affects national economy
and a kind of area that consist clash of interests between individuals,
businesses world and legal authorities.

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Fereidouni,
Najdi and Amiri (2013) analyse effects of governance issues on happiness and
relations between unhappiness and political unrest by using unexamined 14
Middle East and North Africa (MENA) countries, Algeria, Israel, Egypt, Iran,
Kuwait, Syria, Jordan, Lebanon, Saudi Arabia, Morocco, Turkey, Tunisia, United
Arab Emirates and Yemen, rather than develeoped countries, during the period of
2009-2011. The aim of study is to show the effects and relations of governance
components are taken from the Worldwide Governance Indicators of the World Bank
within the six topic; voice and accountability, political stability and absence
of violence, government effectiveness, regulatory quality for private sector
development, rule of law, and control of corruption, on happiness. Countries’
level of happiness’ data consist higher income, being employed, higher level of
education and age of people which are very low in MENA countries according to
2012 World Database of Happiness. The study finds that although governance
components and happiness have direct ratio relations, voice and accountability,
regulatory quality and control of corruption variables’ positive relations are
not significant according to findings from panel data.

Kéita
(2011) studiesdeterminants and implications of corruption, its impact on
economic growth and composition of government expenditures with the data from
23 OECD countries. Main argument of this emrical study is that corruption cause
to decrease economic growth and create an economic problem. panel data, relative to 23 OECD
countries, then to 35 ones, with random and GLS estimators are used.I could not understand how many country he analyzed about.
The yellow side is original from article.

Similar
idea with Kéita is shared by Aidt. Contrary to supporters of corruption because
of the benefits on ecomy throughspeeding up bureaucratic procedures for
bussiness people, Aidt (2009) believe that corruption and economic growth have
inverse ratio relations.

            The other shareholders of negative
effects of corruption on economic growth for the issues of foreign direct
investment, reducing public spending productivity etc. are Shera, Dosti and
Grabova. Shera, Dosti and Grabova (2014) investigates significant negative relationship
on the issue with 22 developing countries,Albania, Macedonia, Serbia,
Montenegro, Bosnia Herzegovina, Moldavia, Mongolia, Polonia, Rumania, Hungary, Ukraine,
Bulgaria, Slovenia, Slovakia, Armenia, Belorussia, Kazakhstan, Kosovo, Estonia,
Lithuania and Russia, in the period between 2001- 2012 by using panel data.

            Lambsdorff finds the adverse
relation ofeconomic development and corruption. According to his empiricalfinding, one point increase of
corruption level on a scale from 10 to 0 (highly corrupt) refers to 4% lover
productivity, reduces net annual capital inflow. In order to fight with
corruption for attracting foreign capital and increasing productivity, some
reformsare necessary. In this issue, it is important to decide the aim for
reducing corruption whether foreign capital or productivity. Although public
sector reforms such as empowerment of bureaucracy and providing government
stability are needed for productivity, foreign capital is provided through tying
political elites’ hands with legal reforms like maintaing rule of law, developping
law and order in the country and ensuring security of property rights by legal
reforms.

Knott
(2012) evaluates the reforms that made by United States for showing its path on
reducing corruption and setting an example for China that might be right or
wrong for China, but it is just to show a strategy for helping to find its own
way. He emphasizes that, corruption caused by state capitalism during the US’
history, led to the Progressive Movement between 1880- 1930, which included
demand about administrative (transparency, public management, accountability,
professional civil service etc.) and political reforms. Achievements on these
issues, deregulation of industry and key leaders in US such as Teddy Roosevelt
from New York, Robert La Follett from Wisconsin led to the improvement on
economy and democracy. As a outcome of these reforms, they succeeded to reduce
corruption. US succeeded it via helps of political party leaders,
privateorganizations in civil society and social movements.Political reform and
institutional competition are necessary in China, albeit not in the same way.

            Clark, Fléche and Senik (2014), who
examines happiness and economic growth, finds that GDP growth does even out the
expansion of level of subjective well-being. According to finding, modern
growth has caused to decrease on the share of two opposite sides of well-being;
very-unhappy and very-happy and opened the way for homogenization.

            In spite of theoretical studies,
empirical finding show that corruption has clearly negative impact on economic
growth. Even anti-corruption reforms is the needed output for every countries,
the way of countries is differ from each other, and they have to create their
unique solutions with reforms.