In many developing countries, starting a business involves navigating a labyrinth of rules and regulations and red tape. Paying a bribe to expedite paperwork is a common practice

Question

As Samuel Huntington puts it—"the only thing worse than a society with a rigid, overcentralized, dishonest bureaucracy is one with a rigid, overcentralized, honest bureaucracy." The argument is that bribes increase economic activity because, without bribes to grease bureaucrats' palms, starting a business would be an extremely long, drawn-out process and would probably drive investors away. Is this always the case, or does bureaucratic corruption involve other costs? Explain your answer.

Answer 1

Most evidence suggests that bureaucratic corruption actually lowers economic efficiency. Although paying a bribe may ensure that economic activity proceeds smoothly, it is a highly inefficient way of getting things done. The resources that are used to pay bribes could have been utilized toward more productive activities in the economy. Also, citizens interact with government officials and bureaucrats very often. Once bribery becomes endemic in a society, it becomes very difficult to control. This makes bureaucratic corruption even more challenging than political corruption.
A-head: CONTROLLING POLITICIANS
Concept: Bureaucratic corruption