Corruption is one of the strongest constraints that impact economic growth negatively. This involves the maltreatment of authority in the appearance of money or influence to attain certain purposes in illegal ways. A corrupted economy cannot function properly as corruption prevents the natural laws to be followed in that country.

Corruption ruins an economy. The total impact goes upon the consumers. Every person has to bear the consequences of corruption. In many developing nations, this is extremely visible that corruptions are everywhere. Most countries have bitter experiences with corruption. The economic growth gets lower while a country goes through more corruption.

Corruption not only has negative impacts but there are also no positive signs of corruption. Countries with more corruption fail to grow constantly. There is always a hiatus. The smooth running of any economy is impossible with corruption. Following are some of the negative points of corruption that are experienced by the corrupted countries and their people.

  • Businessmen have to make bribe payments to run their businesses and to get the necessary permit or licenses. This ultimately passes the cost on to the consumers and the consumers have to bear that amount while purchasing the necessary goods. The businessmen cannot do business with loss, rather they make the consumers pay for that amount of bribe, which is quite a big amount for them.

  • The bribe extortion from businessmen can be measured as taxes. This decreases the encouragement of investment. As the businessmen do not get profit from the investments, they stop investing or at least lower it. This reduced investment leads to reduced production of goods and services. Thus, ultimately the gross domestic products (GDP) get condensed. Lower GDP is an indicator of a poor economy and this actually is the result of corruption.

  • Corrupted nations do not get foreign investments. Foreign nations do not show interest in investing in those countries. Thus, foreign direct Investment (FDI) gets lowered.

  • The revenue from the tax gets lowered because the people do not tend to reveal their actual income and they pay less amount of taxes to the government. Some people think they are getting profited but actually, in the long run, the government has to suffer as the tax revenues get down and it cannot invest in necessary works.

  • Corruption distracts talents and resources, including human resources, towards “money-spinning” rent-seeking activities, such as defence, instead of productive activities.

  • Corruption corrodes the belief we have in the public sector to act in our best interest. This also wastes tax or rate that has been reserved for significant communal projects – meaning we have to raise poor quality service or infrastructures, or we have to miss altogether.

As corruption is hard to measure, a superior amount of data from developing countries will be scarce to find out and to make assessments. Corruption might be an obstacle to economic growth and thus strengthens poverty over numerous channels. This declines national institutes and raises economic inadequacies.