Why entrepreneurs from countries like India, Australia, Romania, and more are growing with a shining future and contributing to their national per capita income, and why others are not?
Corruption is the answer.
How can corruption significantly hinder the economic development of a country?
Corruption is a pervasive issue that plagues nations around the globe, some more than others, impeding progress and stifling economic development. From embezzlement and bribery to nepotism and cronyism, corruption manifests in various forms, leaving a trail of devastation in its wake.
As always, I will speak from my own experience, in this case about my country, Mexico!
In this article, we delve into the insidious ways that the cancer of corruption undermines the economic advancement of countries, hindering prosperity and perpetuating poverty, reducing abysmally entrepreneurs' opportunities to grow.
If you read my last blog post titled; “Evaluating the Governments of the USA and Mexico Strengths and Weaknesses.” You will notice that corruption is a real cancer affecting all areas not only of the country but also that country's people.
The Cancer of Corruption´s Toll on Resource Allocation
At the heart of economic development lies the efficient allocation of resources. However, the cancer of corruption skews this process, diverting funds towards projects that line the pockets of the corrupt rather than fostering genuine growth. Bribes and kickbacks distort decision-making, leading to the misallocation of resources investing in projects that may not be economically viable, resulting in wasting those resources and undermining the competitiveness of markets. Vital public sectors such as infrastructure, healthcare, and education suffer as a result, impeding progress and exacerbating inequality.
Is Corruption Dampening Foreign Investment?
The answer is Yes! Foreign investment serves as a catalyst for economic growth, injecting capital, expertise, and innovation into economies. Yet, corruption acts as a deterrent to foreign investors, dissuaded by the risks posed by opaque business environments and unfair competition. When bribery and extortion become commonplace, investors hesitate to commit capital, fearing expropriation or regulatory hurdles. Consequently, countries like Mexico plagued by corruption struggle to attract the foreign investment necessary for sustained development. This distorts competition, stifles innovation, and discourages entrepreneurs, as smaller businesses without connections struggle to compete.
Corruption Erosion Governance and Rule of Law
Corruption undermines the rule of law by eroding trust in institutions and legal systems, breeding a culture of impunity, as in my case the one I shared in my blog post; “Evaluating the Governments of the USA and Mexico Strengths and Weaknesses.”
When public officials prioritize personal gain over public service, accountability wanes, and transparency fades into obscurity. Legal systems become compromised, rendering contracts unenforceable and property rights precarious, hindering economic transactions and investment. In such environments, entrepreneurs face insurmountable barriers, stifling innovation, and entrepreneurship.
“A man who has never gone to school may steal a freight car; but if he has a university education, he may steal the whole railroad.” Theodore Roosevelt
Allow me to share the story of my dear friends. Navigating my problem of being a victim of corruption, my friends shared with me a few weeks ago something that they recently discovered. Originally from Taiwan, who migrated firstly to America, as they were on a mission to help people, they decided to move to Mexico, unaware of the corruption in my country they opened a school to teach Mandarin. The first one to cheat on them was their accountant, for nine years he was cheating on them to the level of today having to pay high fines. Barely speaking Spanish, they trusted this guy, because he was able to speak a little English. If he is an accountant and he speaks a little English this means that he has a certain level of education, so why does he do that? Even more absurd, my friends were his biggest clients, shouldn't he, take care of them instead? Besides my friends are highly generous with their employees. This is crazy! That's what corruption makes of people. This is only one side of the equation: the employee cheating the boss!
When I told them I will hire a lawyer, they said: No! Don't do that! Look for another way to solve it!
My friends have been victims of transit officers as well, not only them but many of us. Not only does this kind of officer abuse power with impunity, but everywhere, everyone, this is a real cancer of corruption in Mexico! And it is becoming a daily and common habit.
Well, allow me to say that in the traffic laws case if you ignore the law or make a mistake you must pay your ignorance toll, which I could say is fair but why are they always deliberately asking for a bribe?
Are you still with me? Read this… If you don’t hesitate and firmly say to the officer; What's your name officer? Officer-name, I know the law and I'm sorry I made a mistake, you are just doing your job and doing it well. Just give me my ticket, please. They will say, don’t worry, try better next time. Hello? Wait! If the officer is not that “friendly” and you get your ticket and you must go to the transit office another possible nightmare can await you here.
I recently learned that to ask for justice we need to know the law! However, in Mexico, knowing the law can become like the egg and the hen circle, as law execution doesn’t practically exist! Yes! Dear friends, is not easy to build a business under these conditions.
Is The Cancer of Corruption Perpetuating Poverty and Inequality?
The impact of corruption is not only acutely felt by the most vulnerable segments of society, perpetuating poverty, and exacerbating inequality, but it is also felt by entrepreneurs blocking our growth and stopping us from offering job opportunities.
Resources meant for poverty alleviation programs are siphoned off by corruption, leaving the marginalized to languish in deprivation, also hitting entrepreneurial programs, contributing to a setback economy.
As opportunities for upward mobility diminish, social mobility grinds to a halt, entrenching the divide between the haves and the have-nots. In the absence of equitable development, societies remain mired in poverty, trapped in a cycle of corruption and despair.
Corruption siphons off government revenue through embezzlement, tax evasion, and bribery, reducing the funds available for public investment in infrastructure, education, healthcare, and other essential services, besides pushing away international investments. It’s a hara-kiri!
The Cancer of Corruption Case Studies
The detrimental effects of corruption are vividly illustrated by numerous case studies from around the world. From the kleptocratic regimes of certain African nations to the crony capitalism of emerging economies, corruption stifles economic progress and undermines the aspirations of millions. The experiences of countries such as Nigeria, where oil wealth has been squandered through embezzlement and graft, serve as cautionary tales of the perils of corruption unchecked. No mentioning Mexico nowadays, with its political theory on equity growth.
Is this hurt? It is my friends but is the reality many of us have been living in Mexico since I have remembered.
Can we Seeking for Solutions to Avoid The Cancer of Corruption?
Addressing corruption requires a multi-faceted approach, encompassing legal, institutional, and societal reforms. Strengthening and executing anti-corruption laws, enhancing transparency and accountability, and fostering a culture of integrity are imperative steps towards combating corruption. I bet for this last one!
International cooperation and support are also essential, as corruption knows no borders and requires a concerted global effort to eradicate, or at least diminish.
Wrong is wrong, even if everybody is doing it. Right is right, even if no one is doing it.
Conclusion
In the fight for economic development, corruption stands as a formidable adversary, sowing discord, and impeding progress at every turn. Only by confronting corruption head-on can nations hope to realize their full potential and uplift their citizens from poverty to prosperity. It is a battle worth fighting, for the stakes are nothing less than the future of generations to come. Hey! Not only about nations, let’s start at home.
We have nothing about this topic in The School of Your Pass for a Better You, which is currently closed for enrollments but you can register to get into the waiting list when doors open again if you want to get Your Pass for a Better You!
If you want to read more about these entrepreneurial lifestyle insights, you can visit my Blog The Alpha Blog or you can listen to my Podcast "Your Pass for a Better You! Wish is coming soon.
Strength and honor.
See you in the arena...
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