Introduction
Corruption is a common problem in African as well as Asian countries such as Bangladesh. Bangladesh came under scrutiny of the Transparency International Bangladesh (TIB) in 2001 when it was rated as one of the most corrupt nations of the world. Quite obviously, successive governments of Bangladesh became embarrassed with this disclosure (as well as as it continued to top the list of corrupt nations). While this perception based rating had a significant consequence in terms of raising the awareness; it failed to portray the nature as well as the extent of corruption that persists in the society. At the same time, it fails to point out the reasons behind such malpractices.
Governments often consider tighter control in the decision making process, removal of arbitrary authorities, as well as prosecution under the law to combat corruption. Some economists have also argued that reduction of corruption could ideally increase the rate of growth of an economy. For example it is argued that roughly 2-3% of GDP is lost on account of corruption.
Corruption – a boon or a bane for economic growth?
Corruption is an ancient problem. In “Arthasastra”, a treatise on public administration dating back to the fourth century B.C. in India, Kautiliya writes about the persuasion by the government servants to take inducement.Many economists argue that corrupt as well as malfunctioning government institutions constitute a severe obstacle to investment, entrepreneurship, as well as innovation (Lien, 1986). While corruption, in one form or another, has always been present, it has had negative impact in different times at different places, with varying degrees of damaging consequences (Oldenburg, 1987). Bardhan (1997) states that the tenacity with that is it tends to persist, in some cases, may easily lead to despair as well as resignation on the part of those who are concerned about it. The disastrous effect of this is that the country might turn out to be a mafia state in this process. Shleifer as well as Vishny (1993) argue that corruption would tend to lower economic growth, as well as Rose-Ackerman (1978) warns of the difficulty of limiting corruption to areas in that is it might be economically desirable. Murphy, Shleifer as well as Vishny (1993) offer evidence that countries where brilliant people are owed to rent seeking activities tend to grow more slowly.
The Real Estate division in the Context of the Study
‘Real Estate’ means different things to different people (Brueggeman, 2002). while every individual is a customer of real estate services as well as since all of the individuals must interact with others in markets for real estate services, they all share an overriding perspective of real estate as an economic good. Economic goods are by definition scarce in nature. The scarcity itself in turn may give rise to corrupt practices.
This study only considered the ‘construction aspect’[1] of the real estate sector. In particular the study focused on the housing projects built by the construction companies or builders during 1999-2000. Information on the corrupt transactions were gathered from projects that were completed during this time so that the picture on corruption is not based on ‘perception’ but are based on actual facts that is the amount mentioned in this study is what the firms paid to get their job done.
Observation for policy making
The analytical model presented in this paper is devise to ‘productivity’ of bribe. It was hypothesized that bribes are paid to evade legitimate payment as well as collusion emerges between corrupt officials as well as the builders that is ultimately hurts the economy. The premise of the research evolves around Kautiliya’s comment on corrupt practices of government servants as well as it reveals an important result.
Result of our analysis shows that for every taka paid to the government officials in bribe in the construction sector of Bangladesh 27.37 taka loss in revenue occurs to the government. The collusion, was therefore, very productive as well as at the end crippled the government apparatus.
Under this circumstance, the government should consider the following to make the transition to non-corrupt system of administration. Firstly, government should install new guidelines to clear transactions in each agency of the government. There shall be clear time limit on each of the desk officer to clear an application. A delay in answering an application shall be made punishable offence. Secondly, government should reduce all fees to ensure that home buyers do not need to pay extra amount right now. According to our estimate government currently receives only 23% of the actual payment, meaning 77% of the payment is evaded due to bribe. Our findings clearly reinstate the common view that corruption in the government agencies result in huge losses in government revenue.
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