The European Union has been trying to compute the costs of this increased corruption: The estimate is €120 billion annually. This is a combination of lost tax revenue and a reduction in foreign investment. The data is actually pretty shocking given that these are modern industrial states and not the developing nations that are so often assumed to be the most vulnerable to this level of graft and cheating.
Consequences:
Lack of a Level Playing Field: The estimate is that about a third of companies have been blocked from competing for contracts by corrupt practices that discriminate against some companies while providing breaks for others. It is even more distressing to discover that 70% of companies admit to having paid a bribe of some kind to get a permit or permission.
A passive Population: It has now reached a point where 75% of the population believes that their elected leaders and the bureaucrats in government accept brides and a like number of business leaders indicate that they know they will be expected to bribe at some point. This may take the form of a cash payment but more often it is a lavish gift or some special campaign contribution.
Perks and Prostitution: There are any number of “outings” and “inspections” that focus mainly on golfing and beaches and there are many allegations of illegal activity such as prostitution. The actual level of corruption may not be as high as many assume, but the damage is done when the perception is that everything is rigged and no longer subject to any sense of fair and open competition.
Giving Up on Entrepreneurship: The vast majority of those who decide not to engage in entrepreneurial activity cite the fact that the sector is too corrupt for an outsider to enter.
Courtesy Dr. Chris Kuehl, Armada Corporate Intelligence
