Corruption prevents the movement of economic growth. Corruption gives a small group of people unlimited power which allows them to control the currency supply and the makings of policies. “Absolute power corrupts absolutely. ” This is relative to the current economic statuses of countries such as North Korea and African countries where the government holds sole power. The link between poverty and corruption effects the growth of businesses and the growth of individuals.
Corrupt governments do not promote the idea of capitalism. Instead these governments inflict harsh policies and nothing that will benefit the people. Corruption alone is not and can never be the sole reason as to why a country as a whole is impoverished. Through carefully researching and understanding the economic system one can conclude that there are multiple sectors that encompasses the formulation of poverty or rather, there are many sectors that encompass the formulation of civilization and a successful economy.
My research shows that the economic theory has been proven that there is a direct link between how corrupt a country is and the effects on its economic growth. The more corrupt a country is, the less it can further economically. According to Sector and the Stretches, “Corruption impedes economic growth by discouraging foreign and domestic investment, taxing and dampening entrepreneurship, lowering the quality of public infrastructure, decreasing tax revenues, diverting public talent into rent-seeking, and distorting the composition of public expenditure.
In addition to limiting economic growth, there is evidence that corruption also exacerbates income inequality; regression analysis has shown a positive correlation between corruption and income inequality. ” It should be understood that in many countries there is a direct link between irruption and poverty however in many countries there is no direct link between corruption and poverty.
There are many other factors that affect income inequality and the greater the country is primitive, the greater chances it has of being a country that has a great deal of people below the poverty line. This paper explored the relationship between corruption and economic depression which equates to poverty. I hypothesize that corruption has some effect on poverty levels within a country: Population below Poverty line a + bal(Corruption), where bal Corruption and the socio-economic status By charlatanic