A Firm Level Analysis Of Corruption In Vietnam Economics Essay

Published: 2021-06-28 13:30:04
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In literature on exposit flexibility in which the official adjust his demand based on newly available information, in fact have negative impact on his collected revenue.(Tirole) the officials dynamic monopoly is reduce by his own ability to manipulate prices on basis on previous entry. This shows that the official’s choice of information is very essentials in manipulating prices. Thus, a corrupt official may intentionally choose such way of extortion that in end does not allow him know the extorted entrepreneurs. Thus, his collected revenues actually distorted based on ex post information.
Finally in dynamic approach of corruption where government officials know that which entrepreneurs entered in the first time period and, thus manipulate prices in the second period. The study examined that the dynamics of entry are determined by the ratchet effect in that the entrepreneurs intentionally delay entry to take advantage of the good discount offered in future. Furthermore, impacts of ratchet effect on inter temporal collective welfare. The total effect of the ratchet effect on social welfare is uncertain. Thus, there is less entry in first period as compared to the second one. The common practice of job rotation will only diminish corruption if the new official does not have the required information. The results suggested that the anonymous information version examined in Choi and Thum (1998) may lead to endogenously.
Moreover, the authors also explored the government official’s tenure stability on the corruption. In case where the new official able to identify the entrepreneurs in first time period, the job rotation will result in more entrant in first period and welfare be increased. On the other hand, the official being failed to identify the entrants, the job rotation will benefit only if there is more entry in first period and less in second. It is thus superior to the outcome with the ratchet effect.
Foreign investment and bribery: A firm-level analysis of corruption in Vietnam
The existing literature has produced bemused and conflicting outcome on the vital relationship between FDI and corruption mainly for the reason that there exist error in the methods being used to measure these two variables. Drawn from research in experimental psychology, the paper talks about the empirical strategy that is being used to find out the relationship between the two variables foreign trade investment and corruption.
The article basically talks about the corruption at an organizational level in Vietnam. It can be said that whenever a less unfair mean of operation is used, an obvious evidence of corruption can be observed in both the registration and procurement procedures for the countries like Vietnam. However, the prevalence of corruption is not to be linked with FDIs entering the country. On the other hand, "openness" appears to be the most influential factor in reducing the corruption rate in Vietnam, domestic legislation accompanied with the country’s bilateral trade liberalization agreement with the US economy has considerably reduced the corruption and bribery levels during the registration processes. (Gueorguiev and Malesky, 2012)
Rather than just finding out the direct relationship between FDI and corruption, the author pays much attention to the conditioning factors i.e. policy-makers and how can they facilitate investments and to which extent can they limit the negative fallout. The established argument in the writing puts forward that allowing other countries to enter your country must put a downward pressure on corruption for the reason that more competition will bring down the monopoly rents and also cut down the prevalent bribery schedules (Ades & Di Tella, 1999; Larrain & Taveres, 2004; Rose-Ackerman, 1978).
Treisman (2000) has come up with the relationship that exists between openness and corruption measured by imports and GDP, however they also conclude that the effect insubstantially low. Other scholars harmonize with the competition hypothesis; however they do argue that the adoption of business policies and international preferences that are Western for transparency and precision has an equal yet constructive influence on how business are done in other countries (Gerring & Thacker, 2005; Kwok & Tadesse, 2006).
Modern-day methods for studying FDI and corruption has four types of distinguished biases, firstly the sensitivity biases of respondents as to how they act in response to Likert scales; anchoring bias i.e. how he meaning of corruption and bribe is being understood; information bias that is the confidence that the respondents have about the information they reveal will not be used against them; wordings of the questions that leads to the overstatement of the accurate bribe schedule.
To what has FDI predisposed broad-spectrum economic growth, poverty lessening and welfare in Vietnam is hard to evaluate, for the reason that FEI (foreign investment enterprises) are paying as much attention to economic performance as much as they contribute to it. All the same, more than a few fresh contributions have used resourceful empirical strategies to exhibit the influence of FDI on the growth of the economy (Anwar & Nguyen, 2009), manual labor efficiency in manufacturing (Vu, 2008), and encouraging trade and industry spillovers to the household economy through workforce mobility (Nguyen et al., 2008).
The paper seeks to enhance the writing by connecting foreign capital flows to alterations in corruption by concentrating on the most important procedural limitation in the literature: the error of measurement in corruption, which is considerably interrelated with the self-determining variables in examination.
The author advocates that it is difficult to read between the lines about FDI and corruption by using preceding findings, as the intrinsic worth often accredited to FDI may basically result from the actuality that FDI is paying attention to the same category of institutions that generate inferior levels of professed corruption.
Using the UCT modus operandi, the author presents the first finding of this relationship which is detached of such counterfeit correspondence. Into the bargain, the empirical design makes use of both foreign and domestic organizations to deal with the fact that whether FDI has a self-determining effect on corruption or merely fiddles with the domestic norms and bribe lists.
The findings that the authors have drawn reveal convincingly that FIEs are basically not in the favor of paying bribes when listing their operations or when rivaling with domestic firms for government indentures and as a matter of facet are slightly less expected to do so.
Moderately influencing of incoming flows of FDI themselves, it can be said that the toughest determinant of dishonesty and bribery is in reality bring into being by the role played the USBTA in shifting domestic legislation and plummeting prospects and opportunities for corruption when selling and buying from the foreign firms.
The truth that the US-BTA had a predominantly prominent consequence on FIEs, although not on household operations is a positive hint that it was the trade contract and not other local modifications that abridged bribes at registration.
Also, certain kinds of local reforms, for instance registration within industrialized sectors, can lessen bribery amongst foreign financiers or investors. Additionally, these thought-provoking outcomes support the analysis of usual insight by viewing bribes to be much more rigorous amongst the firms with broad capital portfolios and to a great extent less rigorous amongst the firms who hire more workforces.
A key limitation to the findings however is that this measure of corruption only takes into account the "act of corruption", and does not inculcate the size of the original bribes. Meaning that, even though it can be assertively said that FIEs are not expected to make more bribes than local corresponding firms, therefore nothing can be concluded about the outcomes of foreign bribes as opposed to country bribes. By forthcoming the dependent changeable, corruption, as a quantifiable action, the author is to a certain degree disbeliever of the scale of that activity. At the same time as this method puts a stop for making a distinction among the economic seriousness of FDI linked bribes from that of local bribes, the approach however, does not prevent from evaluating the impact of these two types investment on the rates of corruption.
In future, the innovations brought into the design might propose opportunities for reviewing variations and discrepancies in the size and amount of bribes and the economic penalties, although this article is just limited to the analyzing of rates of corruption only. To take the edge off this restriction, the authors came up with hypothetical conceptualization which presupposes that the size and rate of a bribe is not dependent on one another, leading to the conclusion that even if the sizes of bribes for international firms are bigger/lesser as compared to local peers, this dissimilarity is not coupled with the resultant bribe rates being better/less important. This supposition is well-versed by a great writing on corruption that considers the individual action of corruption inside a ‘‘corruption marketplace’’ (Kreps, 1997; Shleifer & Vishny, 1993).
In the light of the market supposition, the rates and sizes of bribing are in competition parameterized by the demand and supply. Consequently it should not be supposed that the size of a bribe will have an effect on the rate of bribe, nor vice versa. However, if, without a doubt, it is true that the foreign bribes are larger than the domestic bribes, the findings fail to paint a very accurate picture. On the other hand, the investigative approach and the central part of the hypothesis that informs the conclusion are well supported together by economic theory and let it have a temporary confidence in the beginning results.
Conclusively, the findings are slightly less decisive for government procurement. At the same time as it can without doubt forget about the debasing pressure of foreign capital flows, the majority other factors that determine corruption also prove to be less noteworthy.
The single covariate which proved noteworthy is the size of labor and procurement in the farming sector. In the future, more significant research and work will be required to get to the bottom of the relations among these factors and global capital flow.
The cross-country pattern of corruption: Economics, culture and the seesaw dynamics: Martin Paldam
The study explores the cross –country pattern from 1999 corruption index from Transparency International. For the economic explanation of the study the model has four variables i.e., the level and growth of real income per capita, inflation rate and the economic freedom index. The countries going through economic transition from poor to rich reduce corruption and high inflation increase corruption. For the cultural explanation of model the author has used a set of dummies for ‘cultures areas’ and for democracy, Gastil index has used.
The historical pattern and casual observations argued that corruption varies widely across counties and overtime, even though the changes are slow. Historians claimed that economic turmoil causes corruption. As claimed by Hofstaedter (1984) that about a century ago, in USA corruption grew to extreme point, but it then fallen steadily as predicted by transition hypothesis. Similarly observers have claimed that corruption in Russia during last decade has worse off when the economy went through depression and chaotic system change.
The literature on corruption shows that different approaches are by different researchers. Till 1998 has used 1000-page handbook, and Rose-Ackerman(1978) used the law and economic approach, while Klitgaard(1998) uses a management approach.
The cross-country corruption data used in this study have recently become available. The two previous studies also attempt to explain the cross-country pattern in corruption, and their results will also be reported in this study. The literature demonstrated that grand cross-country pattern of corruption should explain by mixed economics –cultural model. Many explanatory hypotheses have also been suggested and some of these can be operational and testable hypothesis. The seven of such hypothesis also been studied graphically by simple exploratory model.
The best cross-country corruption data is the k-index of corruption perceptions and published by "Transparency international. It is composite index calculated from 17 primarily indices. These indices are determined by polls taken by business people in many countries, while some are more based using same questionnaire in more countries. The scale goes from 0 being "high corrupt" to 10 the "very low’ or "highly clean". However, there are many definition of corruption concept but the most agreeable is that "corruption is illegal private gains made by an agent at the expense of the principal, when agent deals with the third party".
The k-index has no meaningful dynamic dimension. The reason being the measure has much inertia. A respondent provide the impression of existing corruption level based upon his or her own experience. Thus, these impressions are made over a long period. Moreover, the annual movements in k-index shows the small annual movements in series then test of dynamic structure will be very weak.
Also the previous studies indicated that how corruption likely to fit to greater casual pattern. It is quiet complex and the grand transition that normally takes centuries and causes deep rooted changes in all aspects of the society. The hypothesis that corruption is also one part of the grand transition is included in the study. Also, the economic theory argues that corruption is an endogenous product of economic factors.
The transition hypothesis estimated by the author is:
GDP level and the transition hypothesis for corruption
The hypothesis refers to the fact that corruption is associated with low income countries and it declined when they go through grand transition to become high income countries.
The real growth rate and the hypothesis that hypothesis is a production factor
The supply side idea argued that honesty is a factor of production increasing the growth rate. The production factor hypothesis suggested a positive relation from corruption index to growth.
The inflation rate and the demoralization hypothesis
Corruption is related to "public morale" because it often occurs inpublic sector. Economic turmoil occurs when policies fail and causes people to lose faith in authorities. Thus, there is more corruption in such economic chaos and inflation is a proxy for economic turmoil.
The economic freedom index and hypothesis for rent seeking
The hypothesis suggested that higher corruption, higher will be the chances of rent seeking in a country. The corruption an illegal element of rent seeking. However, the reverse case can also occur as example of Russia showed that administrative deregulations actually decline corruption. The economic freedom or the amount of regulation in a country is measured by k-index of economic freedom. However, the index is scaled in reversed direction i.e. heavily regulated economies are given low scores and vice versa.
•The Gini coefficient and the income skewness hypothesis
The skew income distributed countries may increase to make illegal gains and thus increase corruption. A skew distribution i.e., high Gini should thus result in high corruption.
Finally, study demonstrated large pattern in corruption index from the information by Transparency International. The statistical estimation gives three tentative findings. The literature on cross- country analysis shows that it is hard to finds valid coefficients regression. the tentative conclusion show that the most important determinants of corruption is real GDP per capita the complex economic transition from poor traditional country to rich liberal democracy also include a dramatic decline in level of corruption. The transition in corruption is not only placed at a specific location along the transition path, but it also follows a transition-trend towards less corruption.
Culture however, is than inferior determinant of level of corruption. This finding is explained by a Seesaw dynamics of corruption model around transition –I.e. transition countries either have too much or too little corruption as compared to the transition trend. The transition ina country is impacted by culture, so the countries with similar "basic culture" cluster along the transition path. However, the countries with same cultural background are more similar in GDP level than in the level of corruption.
Inflation on the other hand, increases the corruption within a short time span i.e. Between 5 to 10 years. This result is strong, but not much stable.as inflation is a consequence of the economic system. Thus, the counties with same cultural traditions usually have similar economic system. In this way the effect of inflation interacts with cultural areas.
The outcome of this study shows that democracy seems to decline corruption. However, the countries with more regulations and less economic freedom tend to have high level of corruption. The regulated regime is an essential part of an economic policy, and it also interacts with inflation level in cultural areas. Democracy as well as strict political regime interacts strongly with the transition level. But the independent effect of democracy is doubtful. In conclusion the low level of corruption may lead to high growth, but effect is small and insubstantial. Moreover, honesty is also a weak factor for production.
The author also proposes four policy implications. First two are associated with long-run and with the cultures of the countries. However, these are not practically useful to reform politicians. Moreover, the economic growth that caused by speed of transition also help in declining of corruption. Secondly, the negative finding that cultural determinism view of corruption has progressed poorly. The evidence for the belief that corruption is the part of culture and is so deeply rooted in s society’s culture that of a society that it is unchangeable.
Further, the useful policies are related to short run. It is an essentially important to stabilize the prices as high inflation quickly increases the corruption level. The seesaw pattern observed in corruption suggested pivots. A small push to decline corruption, whether in a sector or on broad level, is unlikely to push corruption over the pivot. Medicore efforts are likely to produce transitory effects. Although, a very large effort can push corruption across the pivot and corruption can decline by its own.
Evidence on corruption as an incentive for foreign direct investment: Peter Egger, Hannes Winner
The study examine the relationship exists between inward foreign direct income (FDI) and corruption. The author has taken a sample of 73 developed and less developed countries with time period from 1995-1999. Their study shows a positive relationship, however the previous studies done show a clear negative relationship between these two variables.
Corruption is the misuse of public resources by public officials in order to gain incentive (Bardhan, 1997) and specially affects economic progress in low-income countries. The research done in this area has argued the impact of corruption on economic growth, inequality, real exchange rate, poverty, and provision of public commodities. There has been researches conducted that showed effects of corruption done on FDI .The FDI also depend on political freedom and civil rights( Harms and Ursprung ,2002). They also demonstrated that a country with low political risks will attract more FDI. Thus, one would expect that the FDI will decline with increase corruption, because corruption reflects unfavorable organizational setup of a country.in such a case corruption will act as "grabbling hands" that increase the cost of investment so high that foreign corporation will reluctant to invest. However, according to Leff (1964) corruption can be expressed as "helping hands" to increase FDI in presence of administrative controls and regulations.
The studies previously had done on relationship between FDI and corruptions implicitly focus on long run effect of corruption by taking cross sectional data. For example WEI (2000) find negative relationship in a cross-section of bilateral FDI. Hines (1995) supported the viewpoint that US locate their FDI in less corrupt countries. In study of 89 cross section of less developed and developed country Habib and Zurawiciki (2002) find that corruption tends to hinder FDI. However, Akcay (2001) research does not find a significant relation between corruption and FDI to less developed countries.
In this paper the author proposed that corruption level in a country is correlated with institutional determinants is partly controlled because it is difficult to measure. They extend the previously empirical evidences on the impact of corruption on FDI in different directions. They used a large panel of 73 countries between the period of 1995 and 1999 and, thus covering almost 90% of world inward FDI stock. The short term and long run relation is estimated by using Hausman-Taylor model. The models will thereby potential endogeneity for long run as well. Moreover, for the robustness of the results they use three different sources for the corruption data.
Additionally, the author also examined how corruption influences the international distribution of FDI. They observed how growth and distribution of FDI has changed due to corruption over the period 1995 to 1999.theortically corruption increased the cost of foreign investment as they have to pay bribes, engage in resource wasting activities and it also involve contract related risks. Thus, corruption in host country referred as "grabbling hand" as they reduce profits of foreign firms trying to invest in their countries. However, corruption may also be "helping hand" who accepts to pay bribes in order to ease the official processes of obtaining legal permission for their set up thus, if the revenue outweighs cost effect corruption will then increase FDI.
The empirical model devised for this study isolate impact of corruption on FDI by controlling the locational choice of horizontally i.e. marketing seeking a d vertically low-cost seeking organized multinational enterprises. Previously studies take either foreign affiliate sales or FDI stock as dependent variable however, this study employ real stocks of FDI. For corruption the data collected by Transparency International (TI, 1995-2001). The TI index summarizes the degree to which corruption being perceived among public officials. The index values between 0 and 10, where 0 correspond to a very high corruption and 10 as low one. Therefore, a negative correlation between index value and FDI indicates a positive relationship of corruption and FDI.
Furthermore, for validity of results they additionally use the corresponding index of the International Country Risk Guide (ICRG) and the World Bank’s 1997/98 index. The former is ranging from0 to6, where 0 being to a high level to corruption. The impact of corruption on inward FDI at aggregate level in an error component framework (Baltagi, 2001).To isolate the corruption effect most other important determinants of FDI are remained controlled. The model devised for this study has taken real inward FDI stock as function of real Gross National Product (GNP) in 1995 US$ ,secondary school enrollment share.log of all continuous variables, and lagged values to take into account the endogenety problem.
Additionally, EU and NAFTA together account for more than 65% of real stocks of FDI in whole sample of 73 countries in time period of 1995-1999. Also EU and EFTA account for less perceived corruption. However, corruption is highest for African, South and Central American as well as Asian countries. In terms of legal system quality the EFTA economies exhibits highest values ,whereas lowest index values are observed in South and Central American nations and African countries as well. Hence, Hausman and Taylor estimation is preferred here as the model is well fit. The short run estimation for corruption coefficient is quiet strong for the correction of potential outliers.
The results of the study demonstrated that corruption stimulate the Foreign investment inflow and agreed with the Leff (1964) position. This also showed that the corruption can benefit to reduce the administrative regulations and legal restrictions. The positive relation in both short and long run support the "helping hand "argument of the foreign investment. Well the short run impact is quiet small that may show a "grabbling hand "argument for a brief time period.
Moreover in other part of study where the author considered long run effects of changes in corruption level between 1995 and 1999 on aggregate inward FDI stock. The results showed that between the observed periods of 1995 to1999 the perceived corruption may increase overall FDI growth by a total of 40 % .the changes demonstrated has taken into account the equalization effect on international distribution of real inward FDI stock. This distribution is mainly in favor of EU and South and Central America at the expense of FDI shares in Asian and NAFTA economies.
Additionally the authors also suggested that the changes in corruption is not the explained a part of what determined the overall FDI growth but also its worldwide distribution. However, more foreign investments flow in low income countries where corruption level is high too; the authors do not support the corrupt institution of a economy. The policies that benefit the social welfare should not circumvent but eliminate corruption (Aidt, 2003) also the positive relationship between corruption in a country and the foreign investment inflow argued that the administrative controls and legal discretion allow public officials to take incentive out of the profits from foreign investment.
Financial liberalization, bureaucratic corruption and economic development
There is an extensive discussion about the intrinsic worth of international financial integration. The argument has been predominantly applicable to the case of not as much of urbanized financial systems and countries, for which there has been an imperative requirement to find suitable strategies to encourage economic augmentation and reduce dearth and poverty.
In spite of all that has been in black and white, what's left is a substantial incongruity about whether financial liberalization is one of these lines of attack. The need to have compromise is found at both hypothetical and experimental levels, plus there is a slight indication of it becoming extinct in the upcoming future.
The article talks about the end product of international financial integration on economic expansion and growth when the worth of domination may be compromised by bribery. The study is based on a go-ahead general equilibrium model of an undersized economy in which development is determined by capital buildup and public course of action is controlled by government-appointed bureaucrats or pen pushers. Bribery and Corruption may come to pass due to the opportunity for public servants to misuse public finances, a chance that is made extra eye-catching by financial liberalization which, simultaneously, lifts up effectiveness in capital creation.
The most important consequences may be recapitulated as follow; for starters, corruption is at all times bad for economic expansion, nevertheless its end product is shoddier if the economy is an open economy than if it is a closed economy. Furthermore, the commonness of bribery may, itself, be exaggerated by both the expansion and openness of the country.
Financial liberalization is superior for growth when authority is good, but possibly will be dire for expansion when governance is awful. Last but not least, dishonesty and scarcity may coexist as enduring, more willingly than just momentary, equipments of an economy.
The Asian crisis is widely looked upon as a most important illustration of what poverty and corruption can lead to when home financial markets are not well urbanized and not well administered (Goldstein, 1998; Ito and Krueger, 1996; Lukauskas and Rivera-Batiz, 2001).
The extensive outflow of capital in the transitional economies capital (e.g., the former Soviet republics) can be construed in almost similar manner (Cooper and Hardt, 2000; Abalkin and Whalley, 1999). Along with the substantial capital flight experiences by a lot of African countries may also be viewed in the same stratum (Ajayi and Khan, 2000; Boyce and Ndikumana, 2001; Collier et al., 2001).
The relationship connecting corruption and financial liberalization is verified in some current empirical readings derived from more official (econometric) analyses. Graeff and Mehlkop (2003) reconsider the connection involving corruption and economic lack of restrictions, as considered by several other writers whose answers hold up the classic assumption that the relationship is off-putting and negative (Chafuen and Guzman, 2000; Paldam, 2002).
The novelty of the analysis is the breakdown of the index of autonomy into its ingredients, every one of which is later allowed to have an individual control on the index of bribery and corruption.
Academic research on the connection between corruption and development is a good deal less broad than pragmatic work on the area under discussion, despite the fact that the equilibrium is gradually being leveled out. Two of the most basic contributions are accredited to Ehrlich and Lui (1999) and Sarte (2000Ehrlich demonstrated how bribery can show the way to a diversion of wealth away from growth-encouraging actions (spending in man force capital) towards on the lookout for power activities (expenditure in political capital), at the same time as the latter of whom gives an idea about how bribery may diminish development by causing wealth to be sidetracked from the prescribed (more resourceful) sectors of the country towards the unceremonious (less resourceful) regions.
Very lately, Blackburn et al. (2006) make public how corruption and development may perhaps act together with each other to bring into being threshold effects and manifold long-run stability, together with poverty trap symmetry. Alike consequences are recognized in Blackburn et al. (2010), Blackburn and Forgues-Puccio (2007) and Blackburn and Sarmah (2008) in link with a variety of other concerns (infectivity effects, income allotment and demographic shift).
The abovementioned debate provides the inspiration for the study that follows. The purpose is to look at the forceful common equilibrium connections between economic expansion, municipal sector bribery and international financial incorporation.
The task involves the stipulation of useful public goods and services by means of the revenues from taxes of household. Corruption possibly will come up for the reason that of the chance for bureaucrats to advance in their own wellbeing by maltreatment their positions of power.
In particular, bureaucrats have the opportunity to improve themselves illegitimately by committing fraud with public funds. A person, who does this, comes face to face with the likelihood of being trapped; in that case he will lose everything, and will have to pay the penalty for his actions.
The engine of development in the country is capital growth, where capital is created by entrepreneurs using finances from all municipal and private representatives. These borrowings are returned at a rate of interest that is prevailing in the country at that moment.
Supporter of international financial integration would argue that dismantling the obstructions for cross country capital flows will be best for economic development only: with smaller amount of limitations on dealings and bigger rivalries amongst agents, there will be efficiency gains which no doubt will lead to higher growth rates in the country. Those of a more disbelieving temperament would argue moderately in a different way: in a subsequent best world of various deficiencies, the elimination of distortions from monetary markets single-handedly may in fact do more impairment than construction.
Comparable vigilance may be uttered about the observation that any boost in the amount of economic (and political) independence is definitely going to perk up the quality of authority by plummeting the degree of corruption. A further sophisticated statement would challenge that this necessarily does not have to be the situation because greater autonomy is accompanied with new inducements and new openings for folks to take on in dishonest practices.
Conclusively, it can be said that it is important to harmonize well with pragmatic annotations and point out the significance of taking into consideration the political economy characteristics of monetary liberalization when assessing the costs that liberalization might encompass.
PURPOSE OF STUDY AND HYPOTHESIS
We have thoroughly seen in the literature that there are many aspect of the intentions for which corruption is carried out. We have discuss various aspects of the corruption amongst the public servants and there affects on socio-economic and cultural norms. We have also discussed the variation of disasters that corruption has caused. In Tanzania, it is found that the salary earned by the public officials was not adequate to cover their domestic expenditures. Public officials usually engage in embezzlement on an individual basis. Embezzlement behavior of government officials bears a strong relationship to the low salary payments provided to them that, in turn, fails to support their living conditions in this cost-driven economy. Further, the embezzlement behavior of these government officials is found to create negative impacts on the economy of the emerging economies thereby increasing their internal and external debt and similarly deteriorating economic and social structure (Myint, 2000).
This is one of the factors that enhanced embezzlement. The research questions, for a research of this magnitude will focus on the following aspects:
Does the aspect of low salary contribute to the behavior of embezzlement of funds among public administrators? and
How can basic salary be structured to curb instances of embezzlement behavior among public administrators?
Research design is primarily a structure of a research process, which can be used as a framework for the collection and interpretation of relevant data. A research design consists of what the investigator will do from determining the hypothesis to the process of investigation to collecting and analyzing data, to drawing conclusions from the analysis of the data. The primary research method is a process through which an investigator collects data through primary sources. It enables the researcher to gather first-hand information from administrators or those who have experienced such behavior. Experimental design is appropriate for this study to collect data to identify the aspect of low salary that contributes to the behavior of embezzlement of funds among public administrators. This research design provides a blueprint of the process that facilitates the investigator to maintain control over the factors that may influence the outcome of the experiment. Embezzlement of funds among public administrators is financial fraud and to derive intended outcomes, the study must adopt this method. Experimental Research is frequently used where there is priority in time in a causal relation or if there is reliability in a causal relation and the magnitude and extent of the correlation is significant. Indeed, ethical leadership is public administration, and policy has a mandate to uphold objectives and organizational culture for the need of improving performance.
Primary research can be done either through interviews or by sending or handling out questionnaires to the intended audience. The current research envisages a research into a topic of public interest, and its findings are expected to be used as a remedial measure to address an issue of common interest. This will assist in curbing the tendency of embezzlement in the official and restore the trust of the public in them.
METHODOLOGY
Collecting data through questionnaires is a common method in research. It encompasses a process of framing questions, the answers to which can provide relevant information to the research questions. In this particular research, this design will help in obtaining direct information from public officials as well as those who have been victimized by them.
Conducting an interview with a sample population is the process through which a researcher finds answers to questions that are relevant to the investigation. Since this is a method of primary data collection from most relevant sources of information, this can be effective in obtaining the correct data relating to the particular research questions in a topic of this nature. When conducting research, it is usually impossible to consider the entire population under study. Representative portions, known as samples, are used to determine some parameters about the entire population under review. Sampling is a research technique applied, in social sciences, to obtain information about a population without the need to assess the entire population (Kothari, 2009). This paper focuses on selecting the most appropriate sampling technique for collecting data to determine the characteristic of low salary, which contributes to the behavior of embezzlement of funds among public administrators.
Snowball sampling is the most appropriate sampling technique to collect data for this survey. This is because the population that represents public administrators, who embezzle funds, is difficult to locate. However, through this technique, a researcher will collect information from few members of the targeted population that he or she can identify, and then use identified members to locate other members (Kothari, 2009). This process will continue until a statistically significant number, of interviewees is achieved. This technique is recommended, especially when a researcher wants to maintain the privacy of responses. Embezzlement of funds is financial fraud that may lead the interviewees into problems such as lack of transparency and accountability; therefore, their privacy id essential when collecting data for this study. In addition, when compared to other sampling techniques, such as cluster and systematic sampling, which target persons in the population to be given equal chances of being selected, this technique does not intend to give interviewees equal chances of being selected (Kothari, 2009). This gives this technique, in the context of the research topic, advantages such as avoiding stereotyping, maintaining clarity, asking questions as they are written, and avoiding tape-recording of responses.
In summary, this study must adopt this technique in order to achieve the intended outcomes. Government officials pertaining to the emerging or developing economies are often found to complain of insufficient compensation schemes and financial packages. The payment schemes of the government officials of such countries are formulated in terms of market rates owing to which the officials in public concerns of emerging economies are subjected to low pay scales. In Cambodia, Public Officials depend on rampant misappropriation of funds for their own private use. Again, ethical and legislative standards in such regions being weaker in nature like absence of proper laws to combat corruption contribute to the further escalation of the problem.
Data collection
After completing the sampling using the Snowball Method, the next step is to determine the types of data to be collected from the sample. The goal is to determine if there is a correlation between annual salary and incidences of bribery or embezzlement by of or by public officials. The first piece of data is to find the annual salary ranges of public officials at the National level. This can be found by going directly to the individual governments' web pages or a credited data base like Lexus-Nexus. The purpose of reviewing the salary ranges is to determine if there is a correlation between salary rates that are not sufficient to provide a family with the basic necessities, and instances of officials being charge with corruption. The next pieces of data will be collected from a survey of public officials. The survey is designed to find public officials that may be potential stake holders to begin the Snowball Sampling process. It will indicate people who receive gifts from contractors or constituents, their feelings about those gifts, time in service and salary range. The survey will be self-administered. Though self-administration has the lowest response rate, due to the international aspect of the data collection, and the sampling size it is the best option. The survey will be distributed electronically to officials in the United State, United Kingdom, and European Union. Once these potential starting points are identified, they will be contacted for an in person interview. At this interview more detailed discussions about corruption and embezzlement can occur. The last piece will come from public officials who have been charged or convicted of bribery, or embezzlement of public of government funds. Having been implicated in corruption these individuals can be approached in a more direct manner. During the personal interview they can be directly asked to appeal to their colleague’s to assist in the study, and start another Snowball point.
RESULTS AND RECOMMENDATIONS
It’s generally observed that the corruption is the largest challenge for Local level and District level Communities nowadays. It’s a challenge which has to be overcome by nations if they want to become one of the developed countries or they are seeking a way out to be in the black because there it can be destructive for the development of nations. The basis of fraud and corruption in the public offices, conversely, still remains as point of dispute. There are not much conclusive amount of data and great variation in results which indicates that this controversial topic needs a lot of study and research. There is a need for exploration on a state level. Surprisingly there is little investigation which is related, and future studies at this level are likely to complement the research on this complex issue, and perhaps will find correlations that are not visible at the aggregated state level.
We have observed that there is a strong relationship between the amount of low salary employees in the ministries of observed countries and the level of corruption in these countries. But in real the situation is quite different; though we predicted a negative relationship, we found that there is a positive relation suggesting that the public employees with higher wages produce an amplified level of bribery. The strategy suggestion for this matter is relatively divisive as this demands that as we wages become low, there would be a decrease in the corruption level. But, this relationship might be caused due to the proxy variable used for the organizational structure differences since our alternative was base on dissimilar groups of staff that these organizations have. As a matter of fact, corruption being our dependent variable is supported on observation that might misrepresent the correlation. We need an immense amount of research to find the differences in institutes which influence the level of corruption. Is a low waging an indication of a sincere and honest system of government or it just a symbol for a corrupt government that gives opportunities for corrupt behavior? In the case if we want a conclusion, how can we deal with such ventures where these kind of controversial opportunities happen?
The single significant correlations we found other that wage are the negative relationship between level of corruption and common trust among the public institutions. This connection or association is perhaps the most established one in regressions regarding corruption. Forlornly, this relationship presents no lucid policy inference as trust and expectations are as intricate a subject as the corruption itself. Determinants of social trust require more research themselves. The use of causality search can be appealing here as this approach is rational to presume that such negative association can runs both ways.
Above and beyond these two correlations, not any of our variables were relevant enough to explain our hypothesis. As we have discussed that this may occur on some incidents due to the flawed proxies or information.
Making an allowance for these occasionally inconclusive outcomes, it is logical to initiate questioning our fundamental theoretical models; can Choice of the Public be used to clarify corruption? Although we can merely prove one of our propositions right and only one incorrect, we still consider that economic suppositions can be useful in such kinds of researches and for that the most essential part is the need for more and latest variables. Because of which even the models like Klitgaard’s are very easy to estimate, measuring the actual value for their mechanism is not viable. The whole economic cost is rigid enough as it partly varies with individuals’ perceptions of, and attitudes towards, risk and other equally hard to measure factors but the moral cost is even harder. We assume that the moral cost of being corrupt is the same among the different ministries (besides variation caused by differences in level of social trust).
By including more variables measuring the moral cost of being corrupt this assumption might be loosened in future research. Examples of such questions might be questions on perceptions of right and wrong, possibly complemented by longer interviews discussing the subject. On top of these problems come the problems of quantifying corruption. Our choice to base this essay on perception might affect some of the results but there are few good alternatives to measuring corruption.
Zambia is just one of many stable democratic LDCs where these kinds of studies can and should be performed in the future. A regression performed on ministries from other countries can see if our results are robust across national borders. A comparison between similar regressions from different countries may also act as a great compliment to state-level investigations. It might also be interesting to incorporate other institutions in this kind of investigation. Similar investigations to this one can be performed both on other government institutions as well as Non-Governmental Organizations (NGO’s). The problem is to find organizations that are sufficiently alike so the variables used will represent a large enough part of the difference among the institutions. Considering the great variation within the NGO-world this might be hard for these types of organizations, but considering the sheer number of NGOs it is not impossible.
In conclusion there are a great number of ways to further improve this area of research; additional variables, changed proxies, new countries and new institutions can greatly improve this type of regression. There is still a lot to learn about the determinants of corruption from this kind of sub-state regression analysis.
Corruption is increasingly viewed as a major obstacle to globalization and the fair and efficient distribution of wealth worldwide (Rose-Ackerman, 1997). Managers seeking to do business in a multi-national context are morally and economically confronted by the realities of corruption (Zekos, 2003). In their efforts to assist global reform and international business activity, social scientists have attempted to describe and explain the causes and effects of corruption across nations (Collier, 2002). Unfortunately, this rather large and growing multi-disciplinary literature has not led to deeper insights and inter-disciplinary understanding due to: (1) the generally atheoretical nature of this work, (2) the failure to look outside one’s disciplinary lens, (3) the different measurement schemes used, and (4) the failure to accumulate results across studies. Consequently, this study sought to synthesize previous literature so that the study of corruption could take stock of what we now know and help the field to move forward. In this study, we examined 511 correlations from 42 empirical studies of corruption that were published from 1995 to 2006. This included examining the antecedents of corruption within the context of three institutional categories—economic, political/legaland socio-cultural. We found that all three groups of macroenvironmental factors were predictive of corruption with correlations ranging from .40 to .45. In addition, we examined the effects of corruption using the same three categories. All three institutional categories were associated with corruption. Political/legal effects, however, were the most highly correlated with corruption. In addition, we also found that there was a stronger correlation between corruption and political/legal effects than the correlation between political/legal antecedents and corruption. We also shed light on the existing levels of agreement among scholars regarding whether given constructs are considered antecedents, effects, or both. In general, political/legal and socio-cultural constructs are considered to be antecedents; whereas, there is less agreement concerning economic constructs as they are considered to be both.

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