Economic growth
A study of corruption in one African country, for example, concluded that corruption intensified ethnic conflict, ruined the efficiency of municipal government and federal agencies, crippled the merit system of hiring and promotion, and generated an “atmosphere of distrust which pervades all levels of administration.
It is also noted how scarce resources are squandered on uneconomical projects because of their potential to generate lucrative payoffs at the expense of priority sectors such as education or health which suffer disproportionately.
Furthermore, when investment does produce results, they are often of inferior quality; public safety is often endangered due to substandard contracting and construction which can render a project completely worthless.
Due to the potentially lucrative rewards from corruption, the legitimate entrepreneurial activity has been hindered. Individuals who would not otherwise engage in illicit behavior are left suffering and pain from poverty.
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