Corruption Case Study

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Some studies show that there are other external factors that promotes rent-seeking. One of these determinants is natural resources. A study covering the period 1980 to 2004 and 124 countries, found that natural resources lead to increase in corruption, especially when the democratic institution is weak (Bhattacharyya and Hodler, 2009, p. 608). This is known as the “resource course.” Instead of the state to use its natural resources to further develop and to create sustainable economy, officials in resource-rich countries tend to seek for bribery when awarding contracts. One of the most famous cases of such malpractices is the Brazil Petrobras scandal. In the $2 billion corruption scandal, 54 people were accused of taking bribes …show more content…

Meaning that the sounder a democratic institution is, the more likely it is able to hold government accountable to the public. Weak institutions are easily manipulated by those elected in office and also by firms, especially in countries with a lot of local governments. While the curse of natural resource may seem to promote corruption, it is mainly the case for a state with weak central power. States that are able to hold their officials accountable to the citizens are better able to limit corruption, thus leading to a sustainable economic and social …show more content…

“It is well known that corruption increases the likelihood that those in the private sector who are subject to regulation will neglect their legal responsibilities, including the responsibility to follow safety standards (Lagunes, 2012, p. 808). There have been many cases in which firms that are uphold to the highest safety standards have violated the safety measures after bribing regulators. These cases have resulted to loss of lives. One example of such tragic incident was the 1999 earthquake in Turkey that claimed the lives of 18,000 people, and left 200,000 civilians’ homeless (Lagunes, 2012, p. 808). Investigation following the incident revealed that the bureaucrats failed to enforce safety regulations with constructions companies after bribery. As a result, many builders practiced using low-quality materials to build houses, and it was estimated that up to 65 percent of the building in Turkey were developed without licenses (Lagunes, 2012, p.

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