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Bribery is a $1 trillion USD annual business - $2.7 billion per diem

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Corruption -- the misuse of public office for private gain from whatever source, AIDS, poverty, and famine rank high on my alarm chart for producing dysfunctional or depopulated states that can be exploited for terrorist and criminal purposes. World Bank is putting the direct cost of bribery at $2.7 billion USD per diem, and that does not include embezzlement of public funds or theft of public assets. If the 2001-2002 world economy was properly valued at around USD $30 trillion, we are talking about severe drag.

The co-author, Daniel Kaufmann, writes that "Corruption tends to be more of a problem in developing and formerly communist countries than in high-income countries. Africa and the successor states to the Soviet Union are the regions considered to have the worst corruption problem." Corruption then forces entire segments of a manufacturing economy off-books into hidden "unofficial" activity in order to avoid higher tax rates, bureaucratic corruption, and mafia protection, all of which create a downward spiral in any faith in the court system.

After direct dollars, there are the impacts of inequality, illiteracy, and infant mortality in developing economies. (There is a useful interactive map series by year, Governance Research Indicator Country Snapshot (GRICS), here.):

  • Reduced overall wealth in a country
  • Reduced amount of money the government has available to pay good workers and purchase supplies
  • Distorted manner in how governments use their money
  • Unfairness in allowing those with money or connections to bend the law or government rules in their favor.

Kaufmann stress that "improving governance, rule of law, and corruption control" lead to increased national and personal incomes, be it rich or poor nations. The underlying reason that people get involved in corruption is that government and social systems fail, producing negative incentives in the bargain, i.e., that there is scant chance to be caught out and there are few offsetting alternatives.

Corruption has four drivers in rich or poor countries:

  • Clear opportunity
  • Little chance of getting caught (usually due to a lack of transparency and weak enforcement)
  • Bad incentives (low job pay , job insecurity, or inverse incentives in which jobs are bought with the expectation of taking bribes)
  • Attitudes or circumstances that make average people disregard the law (typically poverty or scarcity of goods, food, and medicine but can include societal values of clans and extended families)

The corruption pie breakout of Georgia is indicative of the many entry paths for criminal or terrorist groups to affect their ends for targeting, transit, or support operations. Note that the customs authority, judiciary, or police have a very high probability for corruption, just the groups that are supposed to be the guarantors of the state.

It may not be headline grabbing but reduction of the drivers and rewards of corruption will go far in protecting our society by interdicting the terrorist supply chain that ultimately lands a device on our shores.

Influence of Corruption on Business in Transition Countries on the Decrease
World Bank, 2004

$2.7bn Bribes Change Hands Daily, Says World Bank
World Bank News, 12 April 2004

Gordon Housworth



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