Answer to Question #30867 in Economics of Enterprise for abihu

Question

Nations with corrupt police and court systems typically have lower standard of living as compared to nations with less corruption. Why might that be the case?

Answer 1

Corruption is the abuse of public power for private gain. Bribery, misappropriations of
public goods, nepotism (favoring family members for jobs and contracts), and
influencing the formulation of laws or regulations for private gain are common
examples of corruption.

Between $1 trillion and $1.6 trillion dollars are lost globally each year to illegal activities, according to World Bank estimates. Corruption decreases the
amount of wealth in a country and lowers the standard of living. Corruption
affects you even if you don't come into direct contact with it. For example,
corruption:

-Discourages businesses from operating in a corrupt setting, reducing the overall wealth in a country.
-Reduces the amount of money the government has available to pay workers and
buy supplies such as books, medicine and computers.
-Distorts the way the government uses its money, lowering the quality of the
services it provides: schools, health clinics, roads, sewer systems, police.
-Allows those with money or connections to bend the law or government rules in
their favor.
-Undermines everyone's trust in government.