Advantages and disadvantages of bureaucratic systems in economics

¶ … Bureaucratic System as it Is Related to Economics

The objective of this work is to summarize the advantages and disadvantages of the bureaucratic system as it is related to economics.

The consequences of bureaucratic corruption in the economics of a country are seen in unalleviated poverty and in growth of the country's economy being greatly deterred. This is a problem throughout the world as this work will show. This work reviews the situation in sub-Saharan Africa, Bangladesh, and through a report of empirical studies related to this problem. In the work entitled: "Bureaucracy: A Glossary of Political Economy Terms" it is stated that the advantages of the bureaucracy in the organizational techniques used for "creating the powerful centralized nation-stated that predominates the industrialized world of the 20th century."(Johnson, 2006) Johnson goes on to state that: "Hired and promoted largely on the basis of educational credentials and seniority within the organization and protected by civil service personnel practices designed to provide a high degree of job security, bureaucratic officials tend to be very well insulated from responsibility for the external consequences of their decisions and actions as long as they stay formally within prescribed procedures." (Ibid)

SUB-SAHARAN AFRICA BUREAUCRATIC CORRUPTION

In the Nigerian Village Square article entitled: "The Effects of Bureaucratic Corruption on Economic Development: The Case of Sub-Saharan Africa" examined are "the incidence and causes of bureaucratic corruption in Sub-Saharan Africa" and the results or consequences on "economic development" in that area of Africa. Stated to be results of that corruption are "underdeveloped human and natural resources, extremely low levels of productivity, inability to attract and sustain direct foreign investment, continuous mismatch of capital and needs, and deplorable infrastructures. (Klitgaard, 1990; as cited by Ifediora, 2005)

This article states that bureaucratic corruption is "the misuse of the power of public office for personal gain in breach of laws that govern public servants and moral principles." According to Ifediora (2005) bureaucratic corruption occurs when "a government official demands and accepts bribes or kickbacks in performance of normal duties called for by the office. Bribery which can be direct cash payments, gifts or the promise of reciprocity in future transactions, is usually paid either: (1) to gain access to scarce government service, or (2) to avoid the cost of government service." (Ibid)

II. BLACKBURN & FORGUES-PUCCIO

In the work entitled: "Public Expenditures, Bureaucratic Corruption and Economic Development" the authors Blackburn and Forgues-Puccio state that:

1) Corruption is always bad for economic development but its effect is worse if the economy is open than if it is closed;

2) the incidence of corruption may, itself be affected by both the development and the openness of the economy;

3) Financial liberalization is good for development when governance is good, but may be bad for development when governance is bad; and 4) Corruption and poverty may co-exist as permanent, rather than just transitory, fixtures of an economy." (2005)

III. RESULTS of BUREAUCRATIC CORRUPTION in BANGLADESH

In the work entitled: "Bangladesh: Politics and Business between Corruption and Development" stated is that the efforts of Bangladesh "to reduce its massive poverty by reducing economic growth and lowering the achievement of social objectives" are being impeded by "corruption and poor governance." It is additionally stated that the results of corruption are that public resources are channeled to the rich while the poor suffer because "their access to public services, such as public health and education, is reduced while drugs and textbooks are stolen from public facilities and sold privately and while doctors and teachers have high rates of absenteeism from their public jobs and sell their services privately." (Bonn, 2005) Bonn reports that the faith of citizen's in the government is greatly lowered as the government corruption deters both foreign and domestic investments which are needed in Bangladesh and that the government further 'undermines the ability of Bangladesh's development partners to sustain their support for the country."

IV. EMPIRICAL STUDIES

Mauro (1995) made an examination of the results of corruption through use of the Business International (1984) index and growth rates of per capital GDP spanning the years from 1960 to 1985. (Summer and Heston, 1988) Stated is that through use of these variables it was shown by Mauro (1995:702-3) that "a one-standard deviation decrease in the corruption index significantly increases the annual growth rate of GDP per capita by 0.8%." (Akai, Horiuchi and Sakata, 2005)